<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER 0-14804
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GENERAL ELECTRIC CAPITAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
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<S> <C>
DELAWARE 06-1109503
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
260 LONG RIDGE ROAD, STAMFORD, CONNECTICUT 06927 (203) 357-4000
(Address of principal executive offices) (Zip Code) (Registrant's telephone number,
including area code)
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SECURITIES REGISTERED PURSUANT
TO SECTION 12(B) OF THE ACT:
NONE.
SECURITIES REGISTERED PURSUANT
TO SECTION 12(G) OF THE ACT:
TITLE OF EACH CLASS
COMMON STOCK, PAR VALUE $10,000 PER SHARE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NONAFFILIATES OF THE
REGISTRANT AT MARCH 29, 1995. NONE.
AT MARCH 29, 1995, 101 SHARES OF COMMON STOCK WITH A PAR VALUE OF $10,000 WERE
OUTSTANDING.
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J(1)(A) AND (B)
OF FORM 10-K AND IS THEREFORE FILING THIS FORM 10-K WITH THE REDUCED DISCLOSURE
FORMAT.
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TABLE OF CONTENTS
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PAGE
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PART I
Item 1. Business.......................................................... 1
Item 2. Properties........................................................ 2
Item 3. Legal Proceedings................................................. 2
Item 4. Submission of Matters to a Vote of Security Holders............... 3
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters............................................. 4
Item 6. Selected Financial Data........................................... 4
Item 7. Management's Discussion and Analysis of Results of Operations..... 5
Item 8. Financial Statements and Supplementary Data....................... 11
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure............................................ 30
PART III
Item 10. Directors and Executive Officers of the Registrant................ 31
Item 11. Executive Compensation............................................ 31
Item 12. Security Ownership of Certain Beneficial Owners and Management.... 31
Item 13. Certain Relationships and Related Transactions.................... 31
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K............................................................. 32
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PART I
ITEM 1. BUSINESS.
GENERAL ELECTRIC CAPITAL SERVICES, INC.
General Electric Capital Services, Inc. (herein together with its
consolidated subsidiaries called "GE Capital Services" or the "Corporation"
unless the context otherwise requires) was incorporated in 1984 in the State of
Delaware. Until February 1993, the name of the Corporation was General Electric
Financial Services, Inc. All outstanding common stock of GE Capital Services is
owned by General Electric Company, a New York corporation ("GE Company"). The
business of GE Capital Services consists of ownership of two principal
subsidiaries which, together with their subsidiaries and affiliates, constitute
GE Company's principal financial services businesses. GE Capital Services is the
sole owner of the common stock of General Electric Capital Corporation ("GE
Capital") and Employers Reinsurance Corporation ("ERC").
In November 1994, the Corporation elected to terminate the operations of
Kidder, Peabody Group Inc. ("Kidder, Peabody") by initiating an orderly
liquidation of its assets and liabilities. As part of the liquidation plan, the
Corporation received securities of Paine Webber Group Inc. in exchange for
certain broker-dealer assets and operations. Principal activities that were
discontinued include securities underwriting, sales and trading of equity and
fixed income securities, financial futures activities, advisory services for
mergers, acquisitions, and other corporate finance matters, research services
and asset management. Kidder, Peabody has been classified as a discontinued
operation in the financial statements and supplementary data in Item 8 of this
Form 10-K. GE Capital Services' principal executive offices are located at 260
Long Ridge Road, Stamford, Connecticut 06927 (Telephone number (203) 357-4000).
GENERAL ELECTRIC CAPITAL CORPORATION
GE Capital was incorporated in 1943 in the State of New York, under the
provisions of the New York Banking Law relating to investment companies, as
successor to General Electric Contracts Corporation, formed in 1932. The capital
stock of GE Capital was contributed to GE Capital Services by GE Company in June
1984. Until November 1987, the name of the corporation was General Electric
Credit Corporation. The business of GE Capital originally related principally to
financing the distribution and sale of consumer and other products of GE
Company. Currently, however, the type and brand of products financed and the
financial services offered are significantly more diversified. Very little of
the financing provided by GE Capital involves products that are manufactured by
GE Company.
GE Capital operates in four finance industry segments and in a specialty
insurance industry segment. GE Capital's financing activities include a full
range of leasing, lending, equipment management services and annuities. GE
Capital's specialty insurance activities include providing financial guaranty
insurance, principally on municipal bonds and structured finance issues, private
mortgage insurance, and creditor insurance covering international customer loan
repayments. GE Capital is an equity investor in a retail organization and
certain other service and financial services organizations. GE Capital's
operations are subject to a variety of regulations in their respective
jurisdictions.
Services of GE Capital are offered primarily throughout the United States,
Canada, Europe and the Pacific basin. GE Capital's principal executive offices
are located at 260 Long Ridge Road, Stamford, Connecticut 06927. At December 31,
1994, GE Capital employed approximately 32,000 persons.
EMPLOYERS REINSURANCE CORPORATION
ERC, together with its subsidiaries, writes all lines of reinsurance other
than title and annuities. ERC reinsures property and casualty risks written by
more than 1,000 U.S. and non-U.S. insurers, and also writes certain specialty
lines of insurance on a direct basis, principally excess workers' compensation
for self-insurers, errors and omissions coverage for insurance and real estate
agents and brokers, excess indemnity for self-insurers of medical benefits, and
libel and allied torts. ERC and certain U.S. subsidiaries are licensed in all of
the United States, the District of Columbia, certain provinces of Canada and
write property and casualty reinsurance on a direct basis and through brokers.
Other U.S. subsidiaries write excess and surplus lines insurance, and provide
reinsurance brokerage services. Subsidiaries in Denmark and the United Kingdom
write property and casualty and life reinsurance, principally in Europe, the
Pacific basin and the Middle East.
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ITEM 1. BUSINESS (CONTINUED).
In December 1994, certain life and property and casualty affiliates of GE
Capital were transferred to ERC. These affiliates had been managed by ERC since
1986. Insurance and reinsurance operations are subject to regulation by various
insurance regulatory agencies. ERC and its subsidiaries conduct business through
16 domestic offices and 12 foreign offices. The principal offices of ERC are
located at 5200 Metcalf Avenue, Overland Park, Kansas 66201. At December 31,
1994, ERC employed approximately 1,250 persons.
INDUSTRY SEGMENTS
The Corporation provides a wide variety of financing, asset management, and
insurance products and services which are organized into the following industry
segments:
- Specialty Insurance -- U.S. and international multiple-line property and
casualty reinsurance, certain directly written specialty insurance and
life reinsurance (ERC); financial guaranty insurance, principally on
municipal bonds and structured finance issues; private mortgage insurance
and creditor insurance covering international customer loan repayments.
- Consumer Services -- private-label and bank credit card loans, time sales
and revolving credit and inventory financing for retail merchants, auto
leasing and inventory financing, mortgage servicing and annuity and mutual
fund sales.
- Equipment Management -- leases, loans and asset management services for
portfolios of commercial and transportation equipment including aircraft,
trailers, auto fleets, modular space units, railroad rolling stock, data
processing equipment, ocean-going containers and satellites.
- Mid-Market Financing -- loans and leases for middle-market customers
including manufacturers, distributors and end users, for a variety of
equipment, including data processing equipment, medical and diagnostic
equipment, and equipment used in construction, manufacturing, office
applications and telecommunications activities.
- Specialized Financing -- loans and leases for major capital assets,
including industrial facilities and equipment, and energy-related
facilities; commercial and residential real estate loans and investments;
and loans to and investments in corporate enterprises.
Refer to Item 7, "Management's Discussion and Analysis of Results of
Operations," in this Form 10-K for discussion of the Corporation's Portfolio
Quality.
ITEM 2. PROPERTIES.
GE Capital Services and its subsidiaries conduct their businesses from
various facilities, most of which are leased.
ITEM 3. LEGAL PROCEEDINGS.
The following is not material to the Corporation but is provided for
informational purposes. Following GE Company's announcement on April 17, 1994,
of a $210 million charge to net earnings based upon its discovery of false
trading profits at its indirect subsidiary, Kidder, Peabody & Co., Incorporated
("Kidder"), the United States Securities and Exchange Commission, the United
States Attorney for the Southern District of New York, and the New York Stock
Exchange initiated investigations, which are ongoing, relating to the false
trading profits. Also, two civil suits purportedly brought on behalf of GE
Company as shareholder derivative actions were filed in New York State Supreme
Court in New York County. Both suits claim that GE Company's directors breached
their fiduciary duties to GE Company by failing to adequately supervise and
control the Kidder employee responsible for the irregular trading. One suit,
claiming damages of over $350 million, was filed on May 10, 1994, by the
Teachers' Retirement System of Louisiana against GE Company, certain of its
directors, Kidder, its parent, Kidder, Peabody Group Inc., and certain of
Kidder's former officers and directors. The other suit was filed on June 3,
1994, by William Schrank and others against GE Company's directors claiming
unspecified damages and other relief. The defendants' time for responding to
these complaints has been extended until 45 days after the plaintiffs file an
amended consolidated complaint. In addition, various shareholders of GE Company
have filed purported class action suits claiming that GE Company, and certain of
its directors and officers, among others, allegedly violated federal securities
laws by issuing statements concerning GE Company's
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ITEM 3. LEGAL PROCEEDINGS (CONTINUED).
financial condition that included the false trading profits at Kidder, and
seeking compensatory damages for shareholders who purchased GE Company's stock
beginning as early as January 1993. The defendants have filed motions to dismiss
these purported class action suits.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Omitted
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
See Note 12 to the Consolidated Financial Statements. The common stock of
the Corporation is owned entirely by GE Company and, therefore, there is no
trading market in such stock.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be read in conjunction with
the financial statements of GE Capital Services and consolidated affiliates and
the related notes.
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YEAR ENDED DECEMBER 31,
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1994 1993 1992 1991 1990
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(Dollar amounts in millions)
For the Year:
Financing volume........................................ $ 75,438 $ 57,094 $51,186 $45,965 $42,853
Insurance premiums written.............................. 3,962 3,956 2,900 2,155 1,981
========= ========= ======== ======== ========
Earned income........................................... $ 19,875 $ 17,276 $14,418 $13,053 $11,851
Interest expense........................................ 4,545 3,538 3,726 4,351 4,373
Operating and administrative expense.................... 6,200 5,644 4,603 3,214 2,758
Insurance losses and policyholder and annuity
benefits.............................................. 3,507 3,172 1,957 1,623 1,599
Provision for losses on financing receivables........... 873 987 1,056 1,102 688
Depreciation and amortization of buildings and equipment
and equipment on operating leases..................... 1,662 1,592 1,301 1,192 943
Minority interest in net earnings of consolidated
affiliates............................................ 139 134 40 33 46
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Earnings from continuing operations before income taxes
and accounting change................................. 2,949 2,209 1,735 1,538 1,444
Provision for income taxes.............................. 864 642 404 317 319
-------- -------- ------- ------- -------
Earnings from continuing operations before accounting
change................................................ 2,085 1,567 1,331 1,221 1,125
Cumulative effect of accounting change(a)............... -- -- -- (6) --
-------- -------- ------- ------- -------
Earnings from continuing operations..................... 2,085 1,567 1,331 1,215 1,125
Earnings (loss) from discontinued operations............ (1,189) 240 168 41 (31)
-------- -------- ------- ------- -------
Net earnings....................................... $ 896 $ 1,807 $ 1,499 $ 1,256 $ 1,094
========= ========= ======== ======== ========
Ratio of earnings to fixed charges...................... 1.65 1.63 1.46 1.35 1.32
========= ========= ======== ======== ========
At Year End:
Financing receivables
Time sales and loans, net of deferred income....... $ 50,021 $ 40,748 $37,070 $36,849 $35,085
Investment in financing leases, net of deferred
income........................................... 28,398 24,930 23,925 20,411 16,530
-------- -------- ------- ------- -------
Total financing receivables.................... 78,419 65,678 60,995 57,260 51,615
Allowance for losses on financing receivables ..... (2,062) (1,730) (1,607) (1,508) (1,360)
-------- -------- ------- ------- -------
Financing receivables--net..................... $ 76,357 $ 63,948 $59,388 $55,752 $50,255
========= ========= ======== ======== ========
Percent of allowance for losses on financing receivables
to total financing receivables........................ 2.63% 2.63% 2.63% 2.63% 2.63%
========= ========= ======== ======== ========
Equipment on operating leases--net...................... $ 12,859 $ 10,650 $ 9,395 $ 7,552 $ 5,557
========= ========= ======== ======== ========
Total assets of continuing operations................... $144,967 $126,637 $99,010 $86,539 $76,041
========= ========= ======== ======== ========
Capitalization:
Short-term debt.................................... $ 57,087 $ 55,243 $50,481 $45,042 $38,538
Long-term senior debt.............................. 33,615 25,112 21,182 17,946 16,728
Long-term subordinated debt........................ 697 697 697 325 112
Equity(b).......................................... 9,380 10,809 8,884 7,758 6,833
========= ========= ======== ======== ========
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Prior-period data have been reclassified, when necessary, to reflect
classification of Kidder, Peabody as a discontinued operation.
(a) Statement of Financial Accounting Standards (SFAS) No. 106, Employers'
Accounting for Post-retirement Benefits Other Than Pensions, was implemented
in 1991 using the immediate recognition transition option. The cumulative
effect to January 1, 1991, of adopting SFAS No. 106 was $6 million, net of a
$4 million tax benefit, all of which related to ERC.
(b) The Corporation adopted SFAS No. 115, Accounting for Certain Investments in
Debt and Equity Securities, on December 31, 1993, resulting in the inclusion
in equity, net of tax, of net unrealized losses on investment securities of
$821 million and net unrealized gains of $812 million at December 31, 1994
and 1993, respectively.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS.
OVERVIEW
The Corporation's net earnings were $896 million in 1994, 50% less than
1993's earnings of $1,807 million, which were 21% more than the comparable 1992
earnings of $1,499 million. The 1994 decrease was due to the discontinued
operations of Kidder, Peabody Group Inc. (Kidder, Peabody), discussed below. Net
earnings from continuing operations (exclusive of Kidder, Peabody) were $2,085
million in 1994, up 33% from 1993, which increased 18% from 1992.
DISCONTINUED OPERATIONS
In November 1994, the Corporation elected to terminate the operations of
Kidder, Peabody by initiating an orderly liquidation of its assets and
liabilities, including the sale of certain assets and operations to Paine Webber
Group Inc. Discontinued operations resulted in a net loss of $1,189 million in
1994 compared with earnings of $240 million in 1993 and $168 million in 1992.
The 1994 net loss included a net loss from operations of $321 million through
the date operations were discontinued and a provision of $868 million for exit
costs expected to be incurred in connection with the liquidation. The
Corporation expects this liquidation will be largely complete by the end of 1995
and that no further associated costs will be incurred. The 1994 net loss from
operations included a $210 million ($350 million before tax) first quarter
charge resulting from the discovery of false trading profits created by the then
head U.S. government securities trader at Kidder, Peabody & Co. Incorporated, a
subsidiary of Kidder, Peabody. Approximately $143 million ($238 million before
tax) of the charge related to periods prior to 1994. In addition, weakened
mortgage-backed securities market conditions and reduced underwritings
throughout 1994 contributed to the net loss from operations. See Note 2 to the
Consolidated Financial Statements for further details of discontinued
operations.
OPERATING RESULTS FROM CONTINUING OPERATIONS
EARNINGS FROM CONTINUING OPERATIONS were $2,085 million in 1994, up 33%
from 1993 which increased 18% from 1992. The 1994 increase reflected strong
performances in the financing businesses resulting primarily from asset growth,
improved financing spreads and asset quality. Earnings in the Specialty
Insurance segment declined in 1994 due to higher insurance losses. The 1993
earnings increase reflected substantially higher earnings in the financing
businesses, mainly as a result of the favorable 1993 interest rate environment,
asset growth and improved asset quality. Earnings in the Specialty Insurance
segment also increased in 1993 over 1992.
The correlation between interest rate changes and financing spreads (the
excess of yield over interest rates on borrowings) is subject to many factors
and cannot be forecasted with reliability. Although not necessarily relevant to
future effects, management estimates that, all else constant, an increase of 100
basis points in interest rates for all of 1994 would have reduced net earnings
by approximately $90 million.
EARNED INCOME increased 15% to $19.9 billion in 1994, following a 20%
increase to $17.3 billion in 1993. Asset growth in each of the Corporation's
financing segments, through acquisitions of businesses and portfolios as well as
origination volume, was the primary reason for increased income from time sales,
loans, financing leases and operating lease rentals in both 1994 and 1993.
Yields on related assets increased during 1994 after holding essentially flat in
1993 compared with 1992. Earned income from the Corporation's annuity business,
formed through two mid-year 1993 acquisitions, was $1,102 million and $571
million in 1994 and 1993, respectively.
Specialty Insurance revenues were $4.9 billion in 1994, essentially flat
compared with 1993, reflecting steady growth in premium revenue, offset by a
reduction in assumed life reinsurance. The increase in 1993 compared with 1992
of 26% reflected higher premium and investment income as well as the impact of
the creditor insurance business, which was consolidated at the end of the second
quarter of 1992 when an existing equity position was converted to a controlling
interest.
INTEREST EXPENSE on borrowings is the Corporation's principal cost.
Interest expense in 1994 totaled $4.5 billion, 28% higher than in 1993, which
was 5% lower than in 1992. The 1994 increase reflected the effects of higher
average borrowings used to finance asset growth as well as the effects of higher
interest rates. The 1993 decrease was a result of substantially lower rates on
higher average borrowings supporting financing operations. Composite interest
rates on the Corporation's borrowings were 5.47% in 1994 compared with 4.96% in
1993 and 5.78% in 1992.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(CONTINUED).
OPERATING AND ADMINISTRATIVE EXPENSES were $6.2 billion in 1994, a 10%
increase over 1993, which was 23% higher than 1992, primarily reflecting higher
investment levels and costs associated with acquired businesses and portfolios
over the past two years. These increases in both 1994 and 1993 were partially
offset by reductions in provisions for losses on investments charged to
operating and administrative expenses, principally those relating to commercial
real estate assets, highly leveraged transactions (HLT) and commercial aircraft.
INSURANCE LOSSES AND POLICYHOLDER AND ANNUITY BENEFITS increased 11% to
$3.5 billion in 1994, compared with a 62% increase to $3.2 billion in 1993. The
1994 increase was the result of annuity benefits credited to customers of the
annuity business which was acquired in 1993 and adverse loss development in
private mortgage pool insurance, particularly related to the effects of poor
economic conditions and housing value declines in southern California. These
increases were partially offset by lower policyholder benefits in the life
reinsurance business resulting from reduced assumed volume. The 1993 increase
principally reflected annuity benefits relating to the 1993 annuity business
acquisition, as well as higher losses on increased volume in the property and
casualty reinsurance and life reinsurance businesses.
PROVISION FOR LOSSES ON FINANCING RECEIVABLES decreased $114 million to
$873 million in 1994 compared with a $69 million decrease to $987 million in
1993. These provisions principally related to the private-label and bank credit
cards, auto leasing, commercial real estate loans and, in 1993, the HLT
portfolio discussed below under Portfolio Quality in connection with other
financing receivables.
DEPRECIATION AND AMORTIZATION OF BUILDINGS AND EQUIPMENT AND EQUIPMENT ON
OPERATING LEASES increased slightly to $1,662 million in 1994, a 4% increase
over 1993, which was 22% higher than 1992, as a result of additions to equipment
on operating leases through business and portfolio acquisitions as well as
origination volume, and in 1993, the acceleration of depreciation of certain
assets.
PROVISION FOR INCOME TAXES was $864 million in 1994 (an effective tax rate
of 29%), compared with $642 million in 1993 (29%) and $404 million (23%) in
1992. The increased provision for income taxes in both 1994 and 1993 reflected
the effects of additional income before taxes and, in 1993, the 1% increase in
the U.S. federal income tax rate. Increases impacting the effective tax rate in
1994, compared with 1993, included proportionately lower tax-exempt income and
an increase in state income taxes. In addition, there was no current year
counterpart to the effects of certain 1993 financing transactions that reduced
the Corporation's obligation for deferred taxes. These increases were offset by
the absence of a current year counterpart to the unfavorable effects of the 1993
increase in the U.S. federal income tax rate. The higher rate in 1993, compared
with 1992, primarily reflected the increase in the U.S. federal income tax rate
and proportionately lower tax-exempt income, partially offset by the
aforementioned 1993 financing transactions.
OPERATING PROFIT BY INDUSTRY SEGMENT
Operating profit (pre-tax income) of the Corporation, by industry segment,
is summarized in Note 17 to the Consolidated Financial Statements and discussed
below:
SPECIALTY INSURANCE operating profit declined from $770 million in 1993 to
$589 million in 1994 as a result of an operating loss in the private mortgage
insurance business. The 1994 operating loss resulted from adverse loss
development in private mortgage pool insurance, the result of poor economic
conditions and housing value declines in southern California. These losses more
than offset operating profit increases in other parts of the segment, including
primary mortgage insurance. Based on conditions at December 31, 1994, management
believes that loss development should diminish in 1995 and in subsequent years.
However, future economic conditions and housing values in southern California
are uncertainties that could affect that outlook. The 1993 operating profit was
20% higher than the $641 million recorded in 1992, reflecting higher premium
volume from bond refunding in the financial guaranty insurance business as well
as reduced claims expense in the creditor insurance business.
CONSUMER SERVICES operating profit increased 50% to $1,067 million from
$709 million in 1993 which was 16% higher than 1992. The strong 1994 growth in
operating profit resulted from origination and acquisition growth in the auto
leasing business and the private-label and bank credit card businesses. In
addition, the operations of the annuity business, purchased in 1993, were
included for a full year in 1994. The 1993 increase reflected lower provisions
for receivable losses in the private-label and bank credit card businesses
resulting from declines in consumer delinquency as well as strong asset growth
and a
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(CONTINUED).
favorable interest rate environment for both the auto leasing business and the
private-label and bank credit card businesses.
EQUIPMENT MANAGEMENT operating profit increased to $624 million in 1994
from $246 million in 1993. This increase reflected higher volume in most
businesses, largely the result of portfolio and business acquisitions, and of
improved trailer, container and railcar utilization. In addition, expenses
associated with redeployment and refurbishment of owned aircraft declined in
1994 compared with 1993. Operating profit declined 50% in 1993 resulting from
the aforementioned expenses associated with owned aircraft and the effects of
lower utilization and pricing pressures with respect to ocean-going containers.
These declines were partially offset by higher volume in most businesses,
largely the result of asset growth and improved trailer and railcar utilization.
MID-MARKET FINANCING operating profit of $435 million in 1994 was 7% higher
than that of 1993 which was 74% higher than 1992. The 1994 and 1993 increases
reflected higher levels of invested assets, primarily as a result of business
and portfolio acquisitions and increased financing spreads.
SPECIALIZED FINANCING operating profit was $536 million in 1994, compared
with $366 million in 1993, and $35 million in 1992. The increase in 1994
principally reflected much lower provisions for losses on HLT investments and
commercial real estate assets. The 1993 increase also principally reflected much
lower provisions for losses on HLT investments and higher gains from sales of
commercial real estate assets offset in part by higher loss provisions for
commercial real estate assets. Further details concerning loss provisions
relating to both the commercial real estate portfolio and HLT investments are
discussed below.
CAPITAL RESOURCES AND LIQUIDITY
The Corporation's principal source of cash is financing activities that
involve the continuing rollover of short-term borrowings and appropriate
addition of long-term borrowings, with an appropriate balance of maturities.
Over the past three years, the Corporation's borrowings with maturities of 90
days or less have increased by $4.4 billion. New borrowings of $49.5 billion
having maturities longer than 90 days were added during those years, while $28.7
billion of such longer-term borrowings were retired. The Corporation also
generated significant cash from continuing operating activities, $19.5 billion
during the last three years.
The Corporation's principal use of cash has been investing in assets to
grow the business. Of $41.8 billion that the Corporation invested in continuing
operations over the past three years, $18.4 billion was used for additions to
financing receivables, $12.2 billion for new equipment, primarily for lease to
others, and $6.1 billion to acquire new businesses.
GE Company has agreed to make payments to GE Capital, constituting
additions to pre-tax income, to the extent necessary to cause GE Capital's
consolidated ratio of earnings to fixed charges to be not less than 1.10 for
each fiscal year commencing with fiscal year 1991. Three years advance written
notice is required to terminate this agreement. No payments have been required
under this agreement. GE Capital's ratios of earnings to fixed charges for the
years 1994, 1993 and 1992, were 1.63, 1.62 and 1.44, respectively.
The Corporation's total borrowings were $91.4 billion at December 31, 1994,
of which $57.1 billion was due in 1995 and $34.3 billion was due in subsequent
years. Comparable amounts at the end of 1993 were $81.1 billion total, $55.3
billion due within one year and $25.8 billion due thereafter. A large portion of
the Corporation's borrowings was commercial paper ($43.7 billion and $46.3
billion at the end of 1994 and 1993, respectively). Most of this commercial
paper is issued by GE Capital. The average remaining terms and interest rates of
GE Capital's commercial paper were 45 days and 5.90%, respectively, at the end
of 1994 compared with 35 days and 3.39% at the end of 1993. GE Capital's ratio
of debt to equity (leverage) was 8.43 to 1 at the end of 1994 compared with 7.59
to 1 at the end of 1993. Excluding net unrealized gains and losses on investment
securities, GE Capital's leverage was 7.94 to 1 at the end of 1994, compared
with 7.96 to 1 at the end of 1993.
Management believes the Corporation is well positioned to meet the global
needs of its customers for capital and to continue growing its diverse asset
base.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(CONTINUED).
INTEREST RATE AND CURRENCY RISK MANAGEMENT
The Corporation is exclusively an end user of derivative financial
instruments that are used to manage interest rate and currency risk. The
Corporation does not engage in any derivatives trading, market-making or other
speculative activities.
The Corporation manages its exposure to changes in interest rates, in part,
by funding its assets with an appropriate mix of fixed and variable rate debt
and its exposure to currency fluctuations principally by funding local currency
denominated assets with debt denominated in those same currencies. It uses
interest rate swaps and currency swaps (including non-U.S. currency and cross
currency interest rate swaps) to achieve lower borrowing costs. Substantially
all of these swaps have been designated as modifying interest rates and/or
currencies associated with specific debt instruments. All other swaps, forward
contracts and other derivatives have been designated as hedges of non-U.S. net
investments or other assets, and are not significant. These financial
instruments allow the Corporation to lower its cost of funds by substituting
credit risk for interest rate and currency risks. Since the Corporation's
principal use of swaps is to optimize funding costs, changes in interest rates
and exchange rates underlying swaps would not be expected to have a material
impact on the Corporation's financial position or results of operations. The
Corporation conducts almost all activities with these instruments in the
over-the-counter markets.
Established practices require that all derivative financial instruments
relate to specific asset, liability or equity transactions or currency
exposures. Substantially all treasury actions are centrally executed by the
Corporation's Treasury Department, which maintains controls on all exposures,
adheres to stringent counterparty credit standards and actively monitors
marketplace exposures.
Given the ways in which the Corporation uses swaps, market risk associated
with swap activities is meaningful only as it relates to how changes in the
market value of swaps affect credit exposure to individual swap counterparties.
The Corporation has established the following credit policies governing swap
transactions: (a) at inception, counterparties must be rated, at a minimum, Aa3
(Moody's) or AA- (S&P) for swaps of five years or less, and Aaa/AAA for swaps in
excess of five years; and (b) mark to market counterparty exposure is limited to
$50 million for Aa2/AA rated institutions and $75 million for Aaa/AAA rated
institutions. When monthly review of the market values indicate that a
counterparty is approaching the above limits, appropriate actions are initiated
to reduce exposure.
Because of the changing nature of financial markets, the Corporation
incorporates credit downgrade language in its master swap agreements. If either
the Corporation or the counterparty is downgraded below A3 (Moody's) or A-
(S&P), the non-downgraded counterparty has the right to require assignment of
the affected swap to an approved counterparty or termination of the affected
swaps. If termination occurs, the Corporation replaces the swap with an
appropriate counterparty.
The conversion of interest rate and currency risk into credit risk results
in a need to monitor counterparty credit risk actively. At December 31, 1994,
the notional amount of derivatives for which the counterparty was rated below
Aa3/AA- was $1,504 million. These amounts are the result of (1) counterparty
downgrades, (2) transactions executed prior to the adoption of the Corporation's
current counterparty credit standards, and (3) transactions relating to acquired
assets or businesses. The total exposure to market value changes related to
credit risk on swaps at December 31, 1994 was $412 million. The Corporation does
not anticipate any loss on this exposure.
The following chart displays the credit risk exposures at the following
year ends.
PERCENTAGE OF NOTIONAL DERIVATIVE EXPOSURE BY COUNTERPARTY CREDIT RATING
<TABLE>
<CAPTION>
MOODY'S / S&P 1994 1993 1989
------------- ---- ---- ----
<S> <C> <C> <C>
Aaa/AAA................................................... 78% 67% 29%
Aa2/AA.................................................... 17% 21% 19%
A2/A...................................................... 5% 12% 52%
</TABLE>
The optimal funding strategy is sometimes achieved by using multiple swaps.
For example, to obtain fixed rate U.S. dollar funding, several alternatives are
generally available. One alternative is a swap of non-U.S. dollar denominated
fixed rate debt into U.S. dollars. The synthetic U.S. dollar denominated debt
would be effectively created by taking the following steps: (1) issuing fixed
rate, non-U.S. currency
Page 8
<PAGE> 11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(CONTINUED).
denominated debt, (2) entering into a swap under which fixed rate non-U.S.
currency principal and interest will be received and floating rate non-U.S.
currency principal and interest will be paid, and (3) entering into a swap under
which floating rate non-U.S. currency principal and interest will be received
and fixed rate U.S. dollar denominated principal and interest will be paid. The
end result is, in every important respect, fixed rate U.S. dollar denominated
financing with an element of controlled credit risk. This type of structure
usually results from using several swap counterparties for steps (2) and (3).
The Corporation uses multiple swaps only as part of such transactions.
The interplay of the Corporation's credit risk policy with its funding
activities is seen in the following example, in which the Corporation is assumed
to have been offered three alternatives for funding five-year fixed rate U.S.
dollar assets with five-year fixed rate U.S. dollar debt.
<TABLE>
<CAPTION>
SPREAD OVER
TREASURIES
IN BASIS POINTS COUNTERPARTY
------------------- ------------
<S> <C> <C> <C>
1. Fixed rate 5 year medium term note................. +65 --
2. U.S. dollar commercial paper swapped into
5 year U.S. dollar fixed rate funding.............. +40 A
3. Swiss franc fixed rate debt swapped into
5 year U.S. dollar fixed rate funding.............. +35 B
</TABLE>
Counterparty A is a major brokerage house with a Aaa/AAA rated swap
subsidiary and a current exposure to the Corporation of $39 million.
Counterparty B is a Aa2/AA rated insurance company with a current exposure of
$50 million.
In this hypothetical case, the Corporation would have chosen alternative 2.
Alternative 1 is unacceptably costly. Although alternative 3 would have yielded
a lower immediate cost of funds, the additional credit risk would have exceeded
the Corporation's risk management limits.
PORTFOLIO QUALITY
The portfolio of financing receivables, which was $76.4 billion at the end
of 1994 and $63.9 billion at the end of 1993, is the Corporation's largest asset
and its primary source of revenues. Related allowances for losses at the end of
1994 aggregated $2.1 billion (2.63% of receivables -- the same level as 1993 and
1992) and are, in management's judgment, appropriate given the risk profile of
the portfolio. A discussion about the quality of certain elements of the
portfolio of financing receivables follows. Further details are included in
Notes 4, 5 and 6 to the Consolidated Financial Statements.
CONSUMER LOANS RECEIVABLE, primarily retailer and auto receivables, were
$23.1 billion and $17.3 billion at the end of 1994 and 1993, respectively. In
addition, the Corporation's investment in consumer auto finance lease
receivables was $7.5 billion and $5.6 billion at the end of 1994 and 1993,
respectively. Nonearning receivables, which were 1.4% of total loans and leases
(1.7% at the end of 1993), aggregated $422 million at the end of 1994. The
provision for losses on retailer and auto financing receivables was $502 million
in 1994, a 7% increase from $469 million in 1993, reflecting growth in the
portfolio of receivables. Most nonearning receivables were private-label credit
card receivables, the majority of which were subject to various loss-sharing
arrangements that provide full or partial recourse to the originating retailer.
COMMERCIAL REAL ESTATE LOANS classified as finance receivables by the
Commercial Real Estate business were $11.9 billion at December 31, 1994, up $1.0
billion from the end of 1993. In addition, the investment portfolio of the
annuity business included $1.4 billion of commercial property loans at December
31, 1994, up $0.3 billion from the end of 1993. Commercial real estate loans are
generally secured by first mortgages. In addition to loans, the commercial real
estate portfolio included, in other assets, $2.1 billion ($2.2 billion in 1993)
of assets acquired for resale from various financial institutions, including the
Resolution Trust Corporation. Values realized on sales of these assets and the
pace of such sales continue to meet or exceed expectations at the time of
purchase. Also included in other assets were investments in real estate ventures
at year-end 1994 totaling $1.4 billion, the same as at year-end 1993. Those
investments are made as a part of original financings and in conjunction with
loan restructurings where management believes that such investments will enhance
economic returns.
Commercial Real Estate's foreclosed properties at the end of 1994 declined
to $20 million from $110 million at the end of 1993, primarily because of sales.
Page 9
<PAGE> 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
(CONTINUED).
At December 31, 1994, Commercial Real Estate's portfolio included loans
secured by and investments in a variety of property types that continued to be
well dispersed geographically. Nonearning and reduced earning receivables
declined to $179 million in 1994 from $272 million in 1993, reflecting write-
offs and proactive management of delinquent receivables in a stabilized
commercial real estate market. Sustaining the 1994 improvements depends on many
factors, including interest rates and various local market conditions. The loss
provision for Commercial Real Estate's investments was $287 million in 1994
($244 million related to receivables and $43 million related to other assets),
compared with $387 million and $299 million in 1993 and 1992, respectively. The
1994 decrease resulted from lower provisions related to real estate ventures and
foreclosed properties. Loss provisions in 1993 increased as the portfolio was
adversely affected by a weakened commercial real estate market.
OTHER FINANCING RECEIVABLES, $32.5 billion at December 31, 1994, consisted
primarily of a diverse commercial, industrial and equipment loan and lease
portfolio. This portfolio grew $3.5 billion during 1994, while nonearning and
reduced earning receivables decreased to $165 million at year-end 1994 from $237
million at year-end 1993. Included in other financing receivables are financings
provided for highly leveraged management buyouts and corporate
recapitalizations. The portion of those investments classified as financing
receivables was $2.4 billion at the end of 1994, compared with $3.3 billion at
the end of 1993, as repayments continued to reduce this liquidating portfolio.
The year-end balance of the HLT portfolio included amounts that had been written
down to estimated fair value and carried in other assets as a result of
restructuring or in-substance repossession. These balances aggregated $336
million at the end of 1994 and $544 million at the end of 1993 (net of
allowances of $224 million and $244 million, respectively).
The Corporation has loans and leases to commercial airlines, as discussed
in Note 6 to the Consolidated Financial Statements, that aggregated about $7.6
billion at the end of 1994, up from $6.8 billion at the end of 1993. At year-end
1994, the Corporation's commercial aircraft positions included financial
guaranties and funding commitments amounting to $506 million (compared with $450
million in 1993) and conditional commitments to purchase aircraft at a cost of
$81 million ($865 million at December 31, 1993). The decline in purchase
commitments resulted from 1994 purchases of aircraft.
ENTERING 1995, management believes that vigilant attention to risk
management, along with the diversity and strength of the Corporation's
resources, position it to deal effectively with the increasing competition in an
ever-changing global economy.
NEW ACCOUNTING STANDARDS
Principal new accounting standards are SFAS No. 114, Accounting by
Creditors for Impairment of a Loan, and the related SFAS No. 118, which together
modify the accounting and disclosure that applies when it is probable that all
amounts due under contractual terms of a commercial loan will not be collected.
Had these standards been adopted for 1994, there would have been no effect on
earnings or financial position, and management does not foresee any significant
future effect following adoption on January 1, 1995.
Page 10
<PAGE> 13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
General Electric Capital Services, Inc.
We have audited the financial statements of General Electric Capital
Services, Inc. and consolidated affiliates as listed in Item 14. In connection
with our audits of the consolidated financial statements, we also have audited
the financial statement schedules as listed in Item 14. These consolidated
financial statements and financial statement schedules are the responsibility of
the Corporation's management. Our responsibility is to express an opinion on
these consolidated financial statements and financial statement schedules based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of General
Electric Capital Services, Inc. and consolidated affiliates at December 31, 1994
and 1993, and the results of their operations and their cash flows for each of
the years in the three-year period ended December 31, 1994 in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly, in all
material respects, the information set forth therein.
As discussed in Note 12 to the consolidated financial statements, the
Corporation in 1993 adopted required changes in its method of accounting for
investments in certain securities.
/s/ KPMG PEAT MARWICK LLP
Stamford, Connecticut
February 10, 1995
Page 11
<PAGE> 14
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
STATEMENT OF CURRENT AND RETAINED EARNINGS
<TABLE>
<CAPTION>
For the years ended December 31 (In millions) 1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
EARNED INCOME
Time sales, loan, investment and other income (Note 13)............ $ 9,709 $ 7,997 $ 7,136
Financing leases (Note 13)......................................... 2,539 2,315 2,151
Operating lease rentals (Note 6)................................... 3,802 3,267 2,444
Premium and commission income of insurance affiliates (Note 10).... 3,825 3,697 2,687
------- ------- -------
Total earned income........................................... 19,875 17,276 14,418
------- ------- -------
EXPENSES
Interest (Notes 9 & 14)............................................ 4,545 3,538 3,726
Operating and administrative (Note 15)............................. 6,200 5,644 4,603
Insurance losses and policyholder and annuity benefits (Note 10)... 3,507 3,172 1,957
Provision for losses on financing receivables (Note 5)............. 873 987 1,056
Depreciation and amortization of buildings and equipment and equip-
ment on operating leases (Notes 6 & 7)........................... 1,662 1,592 1,301
Minority interest in net earnings of consolidated affiliates....... 139 134 40
------- ------- -------
Total expenses................................................ 16,926 15,067 12,683
------- ------- -------
Earnings from continuing operations before income taxes............ 2,949 2,209 1,735
Provision for income taxes (Note 16)............................... 864 642 404
------- ------- -------
Earnings from continuing operations................................ 2,085 1,567 1,331
Earnings (loss) from discontinued operations (Note 2).............. (1,189) 240 168
------- ------- -------
NET EARNINGS....................................................... 896 1,807 1,499
Dividends paid (Note 12)........................................... (914) (610) (500)
Retained earnings at January 1..................................... 8,212 7,015 6,016
------- ------- -------
RETAINED EARNINGS AT DECEMBER 31................................... $ 8,194 $ 8,212 $ 7,015
======= ======= =======
</TABLE>
See Notes to Consolidated Financial Statements.
Page 12
<PAGE> 15
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
At December 31 (In millions) 1994 1993
-------- --------
<S> <C> <C>
ASSETS
Cash and equivalents..................................................... $ 1,218 $ 1,520
Investment securities (Note 3)........................................... 30,872 26,792
Financing receivables (Note 4):
Time sales and loans, net of deferred income........................ 50,021 40,748
Investment in financing leases, net of deferred income.............. 28,398 24,930
-------- --------
78,419 65,678
Allowance for losses on financing receivables (Note 5).............. (2,062) (1,730)
-------- --------
Financing receivables -- net................................... 76,357 63,948
Other receivables -- net................................................. 6,012 5,201
Equipment on operating leases (at cost), less accumulated amortization of
$4,029 and $3,238 (Note 6)............................................. 12,859 10,650
Buildings and equipment (at cost), less accumulated depreciation of $794
and $581 (Note 7)...................................................... 1,081 961
Other assets (Note 8).................................................... 16,568 17,565
Assets of discontinued operations (Note 2)............................... 8,613 85,093
-------- --------
TOTAL ASSETS............................................................. $153,580 $211,730
======== ========
LIABILITIES AND EQUITY
Notes payable within one year (Note 9)................................... $ 57,087 $ 55,243
Notes payable after one year (Note 9).................................... 34,312 25,809
-------- --------
Total notes payable................................................. 91,399 81,052
Accounts and drafts payable.............................................. 3,777 3,396
Insurance liabilities, reserves and annuity benefits (Note 10)........... 29,438 22,909
Other liabilities........................................................ 4,316 3,087
Deferred income taxes (Note 16).......................................... 4,937 5,481
Liabilities of discontinued operations (Note 2).......................... 8,868 83,695
-------- --------
Total liabilities................................................... 142,735 199,620
-------- --------
Minority interest in equity of consolidated affiliates (Note 11)......... 1,465 1,301
-------- --------
Cumulative preferred stock, $10,000 par value (80,000 shares authorized;
51,000 shares issued and held primarily by consolidated affiliates at
December 31, 1994 and December 31, 1993)............................... 10 --
Common stock, $10,000 par value (101 shares authorized and
outstanding)........................................................... 1 1
Additional paid-in capital............................................... 2,064 1,877
Retained earnings........................................................ 8,194 8,212
Unrealized gains (losses) on investment securities....................... (821) 812
Foreign currency translation adjustments................................. (68) (93)
-------- --------
Total equity (Note 12).............................................. 9,380 10,809
-------- --------
TOTAL LIABILITIES AND EQUITY............................................. $153,580 $211,730
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
Page 13
<PAGE> 16
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the years ended December 31 (In millions) 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings.................................................. $ 896 $ 1,807 $ 1,499
Adjustments for discontinued operations....................... 1,189 (240) (168)
Adjustments to reconcile net earnings to cash provided from
operating activities:
Provision for losses on financing receivables............ 873 987 1,056
Increase in insurance liabilities, reserves and annuity
benefits............................................... 1,624 1,479 703
Increase (decrease) in deferred income taxes............. 653 428 (33)
Depreciation and amortization of buildings and equipment
and equipment on operating leases...................... 1,662 1,592 1,302
Amortization of premium and discount on debt............. 141 99 197
Change in accounts and drafts payable.................... (222) 540 424
Other -- net............................................. (1) 671 303
-------- -------- --------
Cash from continuing operating activities........... 6,815 7,363 5,283
Cash from (used for) discontinued operating
activities........................................ 1,635 (1,910) 60
-------- -------- --------
Cash provided from operating activities............. 8,450 5,453 5,343
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in loans to customers................................ (36,560) (30,002) (27,069)
Principal collections from customers.......................... 31,264 27,571 25,136
Investment in assets on financing leases...................... (10,528) (7,204) (7,758)
Principal collections on financing leases..................... 9,050 6,812 5,338
Net increase in credit card receivables....................... (2,751) (1,341) (330)
Buildings and equipment and equipment on
operating leases -- additions............................... (5,749) (3,139) (3,359)
-- dispositions.......................... 2,420 1,084 1,749
Payments for principal businesses purchased, net of cash
acquired.................................................... (2,031) (2,090) (2,013)
Purchases of investment securities by insurance affiliates and
annuity businesses.......................................... (8,663) (10,488) (6,865)
Dispositions of investment securities by insurance affiliates
and annuity businesses...................................... 6,338 7,698 6,200
Other......................................................... 2,501 (4,003) (3,023)
-------- -------- --------
Cash used for investing activities -- continuing
operations........................................ (14,709) (15,102) (11,994)
Cash from (used for) investing
activities -- discontinued operations............. 334 (107) 157
-------- -------- --------
Cash used for investing activities.................. (14,375) (15,209) (11,837)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (maturities 90 days or less)......... (2,261) 2,404 4,221
Newly issued debt -- short-term (maturities 91-365 days)...... 3,214 4,315 4,456
-- long-term senior...................... 19,228 10,885 6,699
-- long-term subordinated................ -- -- 450
Proceeds -- non-recourse, leveraged lease debt................ 31 53 148
Repayments and other reductions -- short-term
(maturities 91-365
days)....................................................... (10,460) (9,008) (6,474)
-- long-term senior..... (930) (206) (657)
-- long-term
subordinated................................................ -- -- (76)
Principal payments -- non-recourse, leveraged lease debt...... (309) (312) (272)
Proceeds from sales of investment and annuity contracts....... 1,207 509 --
Redemption of investment and annuity contracts................ (1,264) (578) --
Dividends paid................................................ (904) (610) (500)
Issuance of variable cumulative preferred stock by
consolidated affiliate...................................... 240 -- --
-------- -------- --------
Cash from financing activities -- continuing
operations........................................ 7,792 7,452 7,995
Cash from (used for) financing
activities -- discontinued operations............. (2,169) 2,017 (367)
-------- -------- --------
Cash provided from financing activities............. 5,623 9,469 7,628
-------- -------- --------
(DECREASE) INCREASE IN CASH AND EQUIVALENTS DURING THE YEAR... (302) (287) 1,134
CASH AND EQUIVALENTS AT BEGINNING OF YEAR..................... 1,520 1,807 673
-------- -------- --------
CASH AND EQUIVALENTS AT END OF YEAR........................... $ 1,218 $ 1,520 $ 1,807
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
Page 14
<PAGE> 17
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CONSOLIDATION -- GE Capital Services (the "Corporation") owns all of the common
stock of General Electric Capital Corporation ("GE Capital"), Employers
Reinsurance Corporation ("Employers Reinsurance") and Kidder, Peabody Group Inc.
("Kidder, Peabody"). The consolidated financial statements represent the adding
together of GE Capital Services and all majority-owned and controlled affiliates
("consolidated affiliates"), including GE Capital and Employers Reinsurance. In
1994, Kidder, Peabody was classified as a discontinued operation (see Note 2).
Prior period data shown in the consolidated financial statements and the related
notes have been reclassified, as appropriate, to reflect this change. Other
prior period data have been reclassified to conform with current year
presentation.
All significant transactions among the parent and consolidated affiliates
have been eliminated. Other affiliates, generally companies in which the
Corporation owns 20 percent to 50 percent of the voting rights
("non-consolidated affiliates"), are included in other assets and valued at the
appropriate share of equity plus loans and advances.
CASH FLOWS -- Certificates and other time deposits are treated as cash
equivalents.
METHODS OF RECORDING EARNED INCOME -- Income on all loans is recognized on
the interest method. Accrual of interest income is suspended at the earlier of
the time at which collection of an account becomes doubtful or the account
becomes 90 days delinquent.
Financing lease income, which includes residual values and investment tax
credits, is recorded on the interest method so as to produce a level yield on
funds not yet recovered. Unguaranteed residual values are based primarily on
periodic independent appraisals of the values of leased assets remaining at
expiration of the lease terms. Operating lease income is recognized on a
straight-line basis over the terms of the underlying leases.
Origination, commitment and other nonrefundable fees related to fundings
are deferred and recorded in earned income on the interest method. Commitment
fees related to loans not expected to be funded and line-of-credit fees are
deferred and recorded in earned income on a straight-line basis over the period
to which the fees relate. Syndication fees are recorded in earned income at the
time the related services are performed unless significant contingencies exist.
Premiums on short duration insurance contracts are reported as earned
income over the terms of the related reinsurance treaties or insurance policies.
In general, earned premiums are calculated on a pro-rata basis or are determined
based on reports received from reinsureds. Premium adjustments under
retrospectively rated assumed reinsurance contracts are recorded based on
estimated losses and loss expenses, including both case and
incurred-but-not-reported reserves. Premiums on long-duration insurance products
are recognized as earned when due. Premiums received under annuity contracts are
not reported as revenues but as annuity benefits -- a liability -- and are
adjusted according to the terms of the respective policies.
ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES AND INVESTMENTS -- GE Capital
maintains an allowance for losses on financing receivables at an amount which it
believes is sufficient to provide adequate protection against future losses in
the portfolio. For small-balance receivables, the allowance for losses is
determined principally on the basis of actual experience during the preceding
three years. Further allowances are also provided to reflect management's
judgment of additional loss potential. For other financing receivables,
principally the larger loans and leases, the allowance for losses is determined
primarily on the basis of management's judgment of net loss potential, including
specific allowances for known troubled accounts.
All accounts or portions thereof deemed to be uncollectible or to require
an excessive collection cost are written off to the allowance for losses.
Small-balance accounts are progressively written down (from 10% when more than
three months delinquent to 100% when nine to twelve months delinquent) to record
the balances at estimated realizable value. However, if at any time during that
period an account is judged to be uncollectible, such as in the case of a
bankruptcy, the uncollectible balance is written off. Larger-balance accounts
are reviewed at least quarterly, and those accounts which are more than three
months delinquent are written down, if necessary, to record the balances at
estimated realizable value.
Page 15
<PAGE> 18
When collateral is repossessed in satisfaction of a loan, the receivable is
written down against the allowance for losses to estimated fair value,
transferred to other assets and subsequently carried at the lower of cost or
estimated current fair value. This accounting has been employed principally for
specialized financing transactions.
INVESTMENT SECURITIES -- The Corporation has designated its investments in
debt securities and marketable equity securities as available-for-sale. Those
securities are reported at fair value, with net unrealized gains and losses
included in equity, net of applicable taxes. Unrealized losses that are other
than temporary are recognized in earnings.
EQUIPMENT ON OPERATING LEASES -- Equipment is amortized, principally on a
straight-line basis, to estimated net salvage value over the lease term or the
estimated economic life of the equipment.
BUILDINGS AND EQUIPMENT -- Depreciation is recorded on a sum-of-the-years'
digits basis or a straight-line basis over the lives of the assets.
GOODWILL -- Goodwill is amortized on a straight-line basis over periods not
exceeding 30 years. Goodwill in excess of associated expected operating cash
flows is considered to be impaired and is written down to fair value.
DEFERRED INSURANCE ACQUISITION COSTS -- For the property and casualty
businesses, deferred insurance acquisition costs are amortized pro-rata over the
contract periods in which the related premiums are earned. For the life
insurance businesses, these costs are amortized over the premium-paying periods
of the contracts in proportion either to anticipated premium income or to gross
profit, as appropriate. For certain annuity contracts, such costs are amortized
on the basis of anticipated gross profits. For other lines of business,
acquisition costs are amortized over the life of the related insurance
contracts. Deferred insurance acquisition costs are reviewed for recoverability;
for short-duration contracts, anticipated investment income is considered in
making recoverability evaluations.
INSURANCE LIABILITIES AND RESERVES -- The estimated liability for insurance
losses and loss expenses consists of both case and incurred-but-not-reported
reserves. Where experience is not sufficient, industry averages are used.
Estimated amounts of salvage and subrogation recoverable on paid and unpaid
losses are deducted from outstanding losses.
The liability for future policyholder benefits of the life insurance
affiliates has been computed mainly by a net-level-premium method based on
assumptions for investment yields, mortality and terminations that were
appropriate at date of purchase or at the time the policies were developed,
including provisions for adverse deviations.
INTEREST RATE AND CURRENCY RISK MANAGEMENT -- As a matter of policy, the
Corporation does not engage in derivatives trading or market-making activities.
Rather, the principal derivative financial instruments used by the Corporation
are interest and currency swaps used in connection with borrowing activities.
Such swaps are accounted for on an accrual basis and included in interest
expense. Other derivatives, including forwards, futures and options, are hedges
of identified assets, liabilities or functional currency equity positions. The
cost or revenue from such instruments is recognized in income or equity in a
manner consistent with the accounting for the instrument being hedged. If,
however, an instrument is designated but is ineffective as a hedge, the
instrument is marked to market and recognized in operations immediately.
NOTE 2. DISCONTINUED OPERATIONS
In November 1994, the Corporation elected to terminate the operations of Kidder,
Peabody by initiating an orderly liquidation of its assets and liabilities. As
part of the liquidation plan, the Corporation received
Page 16
<PAGE> 19
securities of Paine Webber Group Inc. valued at $657 million in exchange for
certain broker-dealer assets and operations. Summary operating results of the
discontinued operations are as follows:
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
------- ------ ------
<S> <C> <C> <C>
Revenues................................................... $ 4,578 $4,861 $4,022
------- ------ ------
Earnings (loss) before income taxes........................ (551) 439 300
Provision (benefit) for income taxes....................... (230) 199 132
------- ------ ------
Earnings (loss) from operations............................ (321) 240 168
Provision for loss, net of income tax benefit of $266...... (868) -- --
------- ------ ------
Earnings (loss) from discontinued operations............... $(1,189) $ 240 $ 168
======= ====== ======
</TABLE>
A summary of Kidder, Peabody's assets and liabilities at December 31, 1994,
which are expected to be substantially liquidated in 1995, follows:
<TABLE>
<S> <C>
(In millions)
Assets at liquidation values
Trading securities(a)................................................... $2,808
Securities purchased under agreements to resell......................... 2,400
Trade receivables....................................................... 2,934
Other................................................................... 471
------
$8,613
======
Liabilities at settlement values
Short-term borrowings................................................... $2,869
Trade accounts payable.................................................. 2,019
Securities sold under agreements to repurchase.......................... 2,231
Securities sold but not yet purchased................................... 632
Other................................................................... 1,117
------
$8,868
======
</TABLE>
---------------
(a) Trading securities included $1.5 billion of collateralized mortgage
obligations (CMO's).
NOTE 3. INVESTMENT SECURITIES
A summary of investment securities follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
(In millions) COST GAINS LOSSES VALUE
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
DECEMBER 31, 1994
Corporate and other............................... $10,883 $ 4 $ (763) $10,124
State and municipal............................... 9,193 146 (392) 8,947
Mortgage-backed................................... 4,927 82 (220) 4,789
Non-U.S........................................... 3,892 20 (76) 3,836
Equity............................................ 2,147 201 (180) 2,168
U.S. government and federal agency................ 1,185 -- (177) 1,008
--------- ---------- ---------- ---------
$32,227 $ 453 $ (1,808) $30,872
======== ======== ======== =======
DECEMBER 31, 1993
Corporate and other............................... $ 9,972 $ 124 $ (49) $10,047
State and municipal............................... 8,859 786 (9) 9,636
Mortgage-backed................................... 2,487 31 (11) 2,507
Non-U.S........................................... 1,476 82 (10) 1,548
Equity............................................ 1,517 393 (84) 1,826
U.S. government and federal agency................ 1,220 15 (7) 1,228
--------- ---------- ---------- ---------
$25,531 $1,431 $ (170) $26,792
======== ======== ======== =======
</TABLE>
Page 17
<PAGE> 20
Contractual maturities of debt securities at December 31, 1994, other than
mortgage-backed securities, are shown below.
<TABLE>
<CAPTION>
ESTIMATED
AMORTIZED FAIR
(In millions) COST VALUE
--------- ---------
<S> <C> <C>
Due in 1995...................................................... $ 1,792 $ 1,797
1996-1999...................................................... 7,021 6,811
2000-2004...................................................... 5,732 5,408
2005 and later................................................. 10,608 9,899
</TABLE>
It is expected that actual maturities will differ from contractual
maturities because some borrowers have the right to call or prepay certain
obligations, sometimes without call or prepayment penalties. Proceeds from sales
of investment securities in 1994, 1993 and 1992 were $5,821 million, $6,112
million and $3,514 million, respectively; gross realized gains were $281
million, $173 million and $171 million, respectively; and gross realized losses
were $112 million, $34 million and $4 million, respectively.
NOTE 4. FINANCING RECEIVABLES
Financing receivables at December 31, 1994 and 1993 by industry segment are
shown below.
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Time sales and loans:
Consumer services..................................................... $25,906 $18,770
Specialized financing................................................. 17,988 17,028
Mid-market financing.................................................. 5,916 4,693
Equipment management.................................................. 1,516 1,331
------- -------
51,326 41,822
Deferred income....................................................... (1,305) (1,074)
------- -------
Time sales and loans -- net of deferred income............................. 50,021 40,748
------- -------
Investment in financing leases:
Direct financing leases............................................... 25,916 22,063
Leveraged leases...................................................... 2,482 2,867
------- -------
Investment in financing leases................................... 28,398 24,930
------- -------
Total financing receivables................................................ $78,419 $65,678
======= =======
</TABLE>
Time sales and loans represent transactions with customers in a variety of
forms, including time sales, revolving charge and credit arrangements,
mortgages, installment loans, intermediate-term loans and revolving loans
secured by business assets. The portfolio includes time sales and loans carried
at the principal amount on which finance charges are billed periodically, and
time sales and loans acquired on a discount basis carried at gross book value,
which includes finance charges. At year-end 1994 and 1993, specialized financing
and consumer services loans included $13,282 million and $11,887 million,
respectively, for commercial real estate loans. Note 6 contains information on
commercial airline loans and leases.
At December 31, 1994, contractual maturities for time sales and loans were
$20,147 million in 1995, $7,466 million in 1996, $5,708 million in 1997, $4,047
million in 1998, $4,115 million in 1999 and $9,843 million thereafter.
Experience of the Corporation has shown that a substantial portion of
receivables will be paid prior to contractual maturity. Accordingly, the
contractual maturities of time sales and loans are not to be regarded as
forecasts of future cash collections.
Financing leases consist of direct financing and leveraged leases of
aircraft, railroad rolling stock, automobiles and other transportation
equipment, data processing equipment, medical equipment, and other
manufacturing, power generation, mining and commercial equipment and facilities.
As the sole owner of assets under direct financing leases and as the equity
participant in leveraged leases, the Corporation is taxed on total lease
payments received and is entitled to tax deductions based on the cost of leased
assets and tax deductions for interest paid to third-party participants. The
Corporation is also generally entitled to any residual value of leased assets
and to any investment tax credit on leased equipment.
Page 18
<PAGE> 21
Investments in direct financing and leveraged leases represent unpaid
rentals and estimated unguaranteed residual values of leased equipment, less
related deferred income. Because the Corporation has no general obligation for
principal and interest on notes and other instruments representing third-party
participation related to leveraged leases, such notes and other instruments have
not been included in liabilities but have been offset against the related
rentals receivable. The Corporation's share of rentals receivable on leveraged
leases is subordinate to the share of the other participants who also have
security interests in the leased equipment.
The Corporation's investment in financing leases at December 31, 1994 and
1993 is shown below.
<TABLE>
<CAPTION>
DIRECT TOTAL
FINANCING LEASES LEVERAGED LEASES FINANCING LEASES
------------------- ------------------- -------------------
(In millions) 1994 1993 1994 1993 1994 1993
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Total minimum lease payments receivable....... $30,338 $26,584 $ 9,630 $11,496 $39,968 $38,080
Less principal and interest on third-party
nonrecourse debt............................ -- -- (7,103) (8,398) (7,103) (8,398)
------- ------- ------- ------- ------- -------
Net rentals receivable.................... 30,338 26,584 2,527 3,098 32,865 29,682
Estimated unguaranteed residual value of
leased assets............................... 3,767 3,323 1,122 1,167 4,889 4,490
Less deferred income(a)....................... (8,189) (7,844) (1,167) (1,398) (9,356) (9,242)
------- ------- ------- ------- ------- -------
Investment in financing leases................ 25,916 22,063 2,482 2,867 28,398 24,930
Less: Allowance for losses.................... (471) (464) (99) (74) (570) (538)
Deferred taxes arising from financing
leases...................................... (2,470) (2,157) (2,605) (2,760) (5,075) (4,917)
------- ------- ------- ------- ------- -------
Net investment in financing leases............ $22,975 $19,442 $ (222) $ 33 $22,753 $19,475
======== ======== ======== ======== ======== ========
</TABLE>
---------------
(a) Total financing lease deferred income is net of deferred initial direct
costs of $93 million and $83 million for 1994 and 1993, respectively.
At December 31, 1994, contractual maturities for finance lease rentals
receivable were $7,409 million in 1995, $6,235 million in 1996, $5,148 million
in 1997, $3,050 million in 1998, $2,096 million in 1999 and $8,927 million
thereafter. As with time sales and loans, experience has shown that a portion of
receivables will be paid prior to contractual maturity and these amounts should
not be regarded as forecasts of future cash flows.
In connection with the sales of financing receivables with recourse, GE
Capital received proceeds of $1,239 million in 1994, $1,105 million in 1993, and
$1,097 million in 1992. GE Capital's exposure under such recourse provisions is
included in "other financial guaranties" in Note 21.
Nonearning consumer time sales and loans, primarily private-label credit
card receivables, amounted to $422 million and $391 million at December 31, 1994
and 1993, respectively. A majority of these receivables was subject to various
loss-sharing arrangements that provide full or partial recourse to the
originating private-label entity. Nonearning and reduced earning receivables
other than consumer time sales and loans were $346 million and $509 million at
year-end 1994 and 1993, respectively. Earnings of $4 million and $11 million
realized in 1994 and 1993, respectively, were $27 million and $41 million lower
than would have been reported had these receivables earned income in accordance
with their original terms.
NOTE 5. ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES
The allowance for losses on financing receivables represented 2.63% of total
financing receivables at both year-ends 1994 and 1993. The table below shows the
activity in the allowance for losses on financing receivables during each of the
past three years.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Balance at January 1........................................ $1,730 $1,607 $1,508
Provisions charged to operations............................ 873 987 1,056
Net transfers related to companies acquired or sold......... 199 126 52
Amounts written off -- net.................................. (740) (990) (1,009)
------ ------ ------
Balance at December 31...................................... $2,062 $1,730 $1,607
====== ====== ======
</TABLE>
Page 19
<PAGE> 22
Amounts written off in 1994 were approximately 0.91% of average gross
financing receivables outstanding during the year, compared with 1.46% and 1.58%
of average gross financing receivables outstanding during 1993 and 1992,
respectively.
NOTE 6. EQUIPMENT ON OPERATING LEASES
Equipment on operating leases by type of equipment and accumulated amortization
at December 31, 1994 and 1993 are shown in the following table:
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Original Cost
Aircraft......................................................... $ 4,601 $ 3,677
Vehicles......................................................... 4,542 3,568
Marine shipping containers....................................... 3,333 2,985
Railroad rolling stock........................................... 1,605 1,498
Other............................................................ 2,807 2,160
------- -------
16,888 13,888
Accumulated amortization........................................... (4,029) (3,238)
------- -------
$12,859 $10,650
======= =======
</TABLE>
Amortization of equipment on operating leases was $1,435 million in 1994,
$1,395 million in 1993 and $1,133 million in 1992. Noncancelable future rentals
due from customers for equipment on operating leases at year-end 1994 totaled
$7,329 million and were due $2,306 million in 1995, $1,628 million in 1996,
$1,015 million in 1997, $663 million in 1998, $477 million in 1999, and $1,240
million thereafter.
The Corporation acts as a lender and lessor to the commercial airline
industry. At December 31, 1994 and 1993, the aggregate amount of such loans,
leases and equipment leased to others was $7,571 million and $6,776 million,
respectively. In addition, the Corporation had issued financial guaranties and
funding commitments of $506 million at December 31, 1994 ($450 million at
year-end 1993) and had conditional commitments to purchase aircraft at a cost of
$81 million ($865 million at year-end 1993). Included in the Corporation's
equipment leased to others at year-end 1994 is $226 million of commercial
aircraft off-lease ($244 million in 1993).
NOTE 7. BUILDINGS AND EQUIPMENT
Buildings and equipment include office buildings, satellite communications
equipment, data processing equipment, vehicles, furniture and office equipment.
Depreciation expense was $227 million for 1994, $197 million for 1993 and $168
million for 1992.
NOTE 8. OTHER ASSETS
Other assets at December 31, 1994 and 1993 are shown in the table below.
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Assets acquired for resale......................................... $ 3,867 $ 8,141
Goodwill........................................................... 2,513 1,840
Investments in and advances to nonconsolidated affiliates.......... 2,098 1,574
Miscellaneous investments.......................................... 1,652 887
Real estate ventures............................................... 1,400 1,374
Mortgage servicing rights.......................................... 1,351 832
Deferred insurance acquisition costs............................... 1,290 987
Other intangibles.................................................. 1,173 914
Foreclosed real estate properties.................................. 108 213
Other.............................................................. 1,116 803
------- -------
$16,568 $17,565
======= =======
</TABLE>
Goodwill, mortgage servicing rights, and other intangibles are shown net of
accumulated amortization of $988 million at December 31, 1994 and $781 million
at December 31, 1993.
Page 20
<PAGE> 23
Investments in and advances to nonconsolidated affiliates included advances
of $949 million and $688 million at December 31, 1994 and 1993, respectively.
Assets acquired for resale declined $4.3 billion during 1994 primarily due to
sales of mortgages associated with the mortgage servicing business.
NOTE 9. NOTES PAYABLE
Notes payable at December 31, 1994 totaled $91,399 million, consisting of
$90,702 million of senior debt and $697 million of subordinated debt. The
composite interest rate for the Corporation's finance activities during 1994 was
5.47% compared with 4.96% for 1993 and 5.78% for 1992. Total short-term notes
payable at December 31, 1994 and 1993 consisted of the following:
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Commercial paper................................................... $43,697 $46,298
Current portion of long-term debt.................................. 9,695 6,421
Notes with trust departments of banks.............................. 1,793 1,882
Bank borrowings.................................................... 984 197
Other.............................................................. 918 445
------- -------
$57,087 $55,243
======= =======
</TABLE>
The average daily balance of short-term debt, excluding the current portion
of long-term debt, was $45,729 million in 1994 compared with $43,809 million in
1993 and $40,765 million in 1992. The maximum balances of such debt during each
of the past three years were $57,087 million on December 31, 1994, $55,243
million on December 31, 1993 and $50,481 million on December 31, 1992. The
average short-term interest rate, including the effects of associated interest
and currency swaps discussed below and excluding the current portion of
long-term debt, for the year 1994 was 4.53%, representing short-term interest
expense divided by the average daily balance, compared with 3.27% for 1993 and
3.93% for 1992. On December 31, 1994 and 1993, average interest rates were 2.46%
and 3.25%, respectively, for bank borrowings, 5.90% and 3.39%, respectively, for
commercial paper, and 5.66% and 3.10%, respectively, for notes with trust
departments of banks.
Outstanding balances in notes payable after one year at December 31, 1994
and 1993 were as follows.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
(Dollars in millions) INTEREST RATE(A) MATURITIES 1994 1993
---------------- ---------- ------- -------
<S> <C> <C> <C> <C>
Senior notes
Notes(b)(c)................................ 6.41% 1996-2054 $31,332 $22,028
Reset or remarketed notes(d)............... 8.25 2007-2018 1,025 1,500
Zero coupon/deep discount notes............ 13.58 1996-2001 936 1,407
Floating rate notes........................ (e) 1996-2053 521 521
Less unamortized discount/premium.......... (199) (344)
------- -------
Total senior notes.................... 33,615 25,112
------- -------
Subordinated notes(f)........................ 8.04 2006-2012 697 697
------- -------
$34,312 $25,809
======= =======
</TABLE>
---------------
(a) Includes the effects of associated interest rate and currency swaps.
(b) At December 31, 1994 and 1993, the Corporation had agreed with others to
exchange currencies and related interest payments on principal amounts
equivalent to U.S. $12,183 million and $8,101 million, respectively. At
December 31, 1994 and 1993, the Corporation also had entered into interest
rate swaps with others relating to interest on $24,129 million and $13,224
million, respectively.
(c) At December 31, 1993, counterparties held options under which the
Corporation could be caused to execute interest rate swaps associated with
interest payments on $500 million.
(d) Interest rates are reset at the end of the initial and each subsequent
interest period. At each rate-reset date, the Corporation may redeem notes
in whole or in part at its option. Current interest periods range from May
1996 to March 1997.
(e) The rate of interest payable on each note is a variable rate based on the
commercial paper rate each month. Interest is payable either monthly or
semiannually at the option of the Corporation.
(f) Guaranteed by GE Company.
Page 21
<PAGE> 24
At December 31, 1994, long-term borrowing maturities, including the current
portion of long-term debt, were $9,695 million in 1995, $10,394 million in 1996,
$6,556 million in 1997, $4,507 million in 1998, and $3,417 million in 1999.
At December 31, 1994 GE Capital had committed lines of credit aggregating
$20.8 billion with 131 banks, including $7.0 billion of revolving credit
agreements with 69 banks pursuant to which GE Capital has the right to borrow
funds for periods exceeding one year. A total of $2.6 billion of these lines
were also available for use by GE Capital Services. In addition, at December 31,
1994, approximately $109 million of committed lines of credit were directly
available to a foreign affiliate of GE Capital. Also, at December 31, 1994,
substantially all of the approximately $3.1 billion of GE Company's credit lines
were available for use by GE Capital or GE Capital Services. During 1994, GE
Capital, GE Capital Services and GE Company did not borrow under any of these
credit lines. The Corporation compensates banks for credit facilities in the
form of fees which were immaterial for the past three years.
Interest rate and currency swaps are employed to achieve the lowest cost of
funding for a particular funding strategy. Optimizing funding costs is central
to maintaining satisfactory financing spreads (the difference between the yield
on financial assets and borrowing costs). The Corporation enters into interest
rate swaps and currency swaps (including non-U.S. currency and cross-currency
swaps) to modify interest rates and/or currencies of specific debt instruments.
For example, to fund U.S. operations, GE Capital may issue fixed-rate debt
denominated in a currency other than the U.S. dollar and simultaneously enter
into a currency swap to create synthetic fixed-rate U.S. dollar debt with a
lower yield than could be achieved directly. Virtually all interest rate and
currency swaps have been designated as modifying interest rates and/or
currencies associated with specific debt instruments. All other swaps, forward
contracts and other derivatives have been designated as hedges of non-U.S.
dollar monetary assets or net investments (see Note 21). The debt-associated
swaps allow the Corporation to lower its cost of funds by substituting credit
risk for interest rate and currency risks. Since the Corporation's principal use
of swaps is to optimize funding costs, changes in interest rates and exchange
rates underlying swaps would not be expected to have a material impact on the
Corporation's financial position or results of operations. The Corporation
conducts almost all activities with these instruments in the over-the-counter
markets. The Corporation does not engage in derivatives trading or market-making
activities.
Each party in a swap transaction relies on its counterparties to make
contractual payments. Given the ways in which the Corporation uses swaps,
associated market risk is meaningful only as it relates to how changes in the
market value affect credit exposure to individual swap counterparties. To manage
counterparty credit exposure, substantially all transactions are executed
centrally by the Corporation's Treasury Department, which maintains controls on
all exposures, adheres to stringent counterparty credit standards and actively
monitors marketplace exposures. All swap activities are carried out within the
following credit policy constraints:
- At inception, counterparties must be rated, at a minimum, Aa3 (Moody's)
or AA- (S&P) for swaps of five years or less and Aaa/AAA for swaps in
excess of five years.
- Credit exposure is limited to a market value of $50 million for
counterparties rated Aa2/AA and $75 million for those rated Aaa/AAA.
- All swaps are executed under master swap agreements containing mutual
credit downgrade provisions that provide the ability to require assignment
or termination in the event either party is downgraded below A3 or A-. The
total exposure to market value changes related to credit risk on swaps at
December 31, 1994 was $412 million. The Corporation does not anticipate
any loss on this exposure.
Page 22
<PAGE> 25
NOTE 10. INSURANCE LIABILITIES, RESERVES AND ANNUITY BENEFITS
Insurance liabilities, reserves and annuity benefits represent policyholders'
benefits, unearned premiums and provisions for policy losses and benefits
relating to insurance and annuity businesses. The related balances at December
31, 1994 and 1993 follow.
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Annuity benefits................................................... $13,186 $ 8,894
Other policyholder benefits........................................ 6,569 5,862
Property and casualty reserves..................................... 6,186 5,798
Financial and mortgage guaranty reserves........................... 725 607
Unearned premiums.................................................. 2,772 1,748
------- -------
$29,438 $22,909
======= =======
</TABLE>
The liability for future policy benefits of the life insurance affiliates,
included in other policyholder benefits above, has been computed using average
yields of 4.0% to 9.1% in 1994 and 6.2% to 10.1% in 1993.
Activity in the liability for unpaid claims and claims adjustment expenses
is summarized as follows for the past three years.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
------- ------- ------
<S> <C> <C> <C>
Balance at January 1 -- gross............................. $ 6,405 $ 5,484 $4,565
Less reinsurance recoverables............................. (1,142) (1,191) (688)
------- ------- ------
Balance at January 1 -- net............................... 5,263 4,293 3,877
Claims and adjustment expenses incurred
Current year......................................... 2,016 2,051 1,679
Prior years.......................................... 558 359 117
Claims and adjustment expenses paid
Current year......................................... (543) (378) (464)
Prior years.......................................... (1,432) (1,048) (967)
Other..................................................... 86 (14) 51
------- ------- ------
Balance at December 31 -- net............................. 5,948 5,263 4,293
Add reinsurance recoverables.............................. 1,084 1,142 1,191
------- ------- ------
Balance at December 31 -- gross........................... $ 7,032 $ 6,405 $5,484
======= ======= ======
</TABLE>
Financial guaranties of insurance affiliates as of December 31, 1994 and
1993 are summarized below.
<TABLE>
<CAPTION>
(In millions) 1994 1993
-------- --------
<S> <C> <C>
Guaranties, principally on municipal bonds and structured
finance issues................................................. $106,726 $101,352
Reinsurance on bonds/finance issues.............................. (18,954) (17,287)
Mortgage insurance risk in force (GE Capital Mortgage
Insurance)..................................................... 31,463 27,022
Other............................................................ 191 84
-------- --------
$119,426 $111,171
======== ========
</TABLE>
The Corporation's Specialty Insurance businesses are involved significantly
in the reinsurance business, ceding reinsurance on both a pro-rata and an excess
basis. When the Corporation cedes business to third parties, it is not relieved
of its primary obligation to policyholders and reinsureds. Consequently, the
Corporation establishes allowances for amounts deemed uncollectible due to the
failure of reinsurers to honor their obligations. The Corporation monitors both
the financial condition of individual reinsurers and risk concentrations arising
from similar geographic regions, activities and economic characteristics of
reinsurers. The maximum amount of individual life insurance retained on any one
life is $1,300,000.
Page 23
<PAGE> 26
The effects of reinsurance on premiums written and earned were as follows
for the past three years.
<TABLE>
<CAPTION>
Written Premiums Earned Premiums
---------------------------- ----------------------------
(In millions) 1994 1993 1992 1994 1993 1992
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Direct......................... $1,816 $1,639 $1,323 $1,787 $1,480 $1,154
Assumed........................ 2,696 2,540 2,030 2,596 2,424 1,989
Ceded.......................... (550) (223) (453) (558) (207) (456)
------ ------ ------ ------ ------ ------
Net Premiums................... $3,962 $3,956 $2,900 $3,825 $3,697 $2,687
====== ====== ====== ====== ====== ======
</TABLE>
Reinsurance recoveries recognized as a reduction of insurance losses and
policyholder and annuity benefits amounted to $434 million, $304 million and
$525 million for the periods ended December 31, 1994, 1993 and 1992,
respectively.
NOTE 11. MINORITY INTEREST
Minority interest in equity of consolidated affiliates includes 8,750 shares of
$100 par value variable cumulative preferred stock issued by GE Capital, with a
liquidation preference value of $875 million, and 2,400 shares of $0.01 par
value variable cumulative preferred stock issued in 1994 by a subsidiary of GE
Capital, with a liquidation preference value of $240 million. Dividend rates on
the preferred stock ranged from 2.3% to 4.9% during 1994 and from 2.3% to 2.8%
during 1993.
NOTE 12. EQUITY
GE Capital Services preferred stock was $510 million at December 31, 1994. At
December 31, 1993, all such preferred shares were held by consolidated
affiliates; at December 31, 1994, $10 million of such shares, which were
dividended to GE Company in 1994, were held by GE Company and the remainder were
held by consolidated affiliates of the Corporation. All other equity is owned
entirely by GE Company. Cash dividends paid were $904 million in 1994, $610
million in 1993 and $500 million in 1992. In 1994, GE Company contributed to the
Corporation the net assets of the recently acquired Consolidated Insurance
Group, which increased the Corporation's additional paid-in capital by $187
million. In 1992, GE Company contributed to the Corporation the assets of GE
Computer Services and the minority interest in Financial Insurance Group, which
increased the Corporation's additional paid-in capital by $155 million.
On December 31, 1993, the Corporation adopted Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. As a result of adopting this statement, changes in the
fair value of investment securities are reflected, net of tax, in equity. At
December 31, 1994, unrealized losses on investment securities were $821 million,
a reduction in equity of $1,633 million from year-end 1993. The decrease was
primarily attributable to the effect of increases in market interest rates on
the fair value of the securities.
At December 31, 1994 and 1993, the statutory capital and surplus of the
Corporation's insurance affiliates totaled $5,657 million and $4,829 million,
respectively, and amounts available for the payment of dividends without the
approval of the insurance regulators totaled $413 million and $382 million,
respectively.
NOTE 13. EARNED INCOME
Time sales, loan and investment and other income includes the Corporation's
share of earnings from equity investees of approximately $169 million, $106
million and $72 million for 1994, 1993 and 1992, respectively.
Included in earned income from financing leases for 1994, 1993 and 1992
were gains on the sale of equipment at lease completion or early termination of
$180 million, $145 million and $126 million, respectively.
NOTE 14. INTEREST EXPENSE
Interest expense reported in the Statement of Current and Retained Earnings in
1994, 1993 and 1992 is net of interest income on temporary investments of excess
funds of $45 million, $42 million and $48 million, respectively, and net of
capitalized interest of $9 million, $5 million and $6 million, respectively.
Page 24
<PAGE> 27
For purposes of computing the ratio of earnings to fixed charges (the
"ratio"), earnings consist of earnings from continuing operations adjusted for
the cumulative effect of accounting change, the provision for income taxes,
minority interest and fixed charges. Fixed charges consist of interest on all
indebtedness and one-third of annual rentals, which the Corporation believes is
a reasonable approximation of the interest factor of such rentals. The ratio was
1.65 for 1994, compared with 1.63 for 1993 and 1.46 for 1992.
NOTE 15. OPERATING AND ADMINISTRATIVE EXPENSES
Employees and retirees of the Corporation and its affiliates are covered under a
number of pension, health and life insurance plans. The principal pension plan
is the GE Company pension plan, a defined benefit plan, while employees of
certain affiliates, including ERC, are covered under separate plans. The
Corporation provides health and life insurance benefits to certain of its
retired employees, principally through GE Company's benefit program, as well as
through plans sponsored by ERC and other affiliates. The annual cost to the
Corporation of providing these benefits is not material.
GE Company adopted SFAS No. 112, Employers' Accounting for Postemployment
Benefits, in the second quarter of 1993. The Corporation adopted this standard
in conjunction with its parent. This Statement requires that employers expense
the costs of postemployment benefits (as distinct from postretirement pension,
medical and life insurance benefits) over the working lives of their employees.
This change principally affects the Corporation's accounting for severance
benefits, which previously were expensed when the severance event occurred. The
net transition obligation related to the Corporation's employees covered under
GE Company postemployment benefit plans is not separately determinable from the
GE Company plans as a whole. The net transition obligation for employees covered
under separate plans is not material.
Rental expense relating to equipment the Corporation leases from others for
the purposes of subleasing was $262 million in 1994, $239 million in 1993 and
$151 million in 1992. Other rental expense was $206 million in 1994, $174
million in 1993 and $125 million in 1992, principally for the rental of office
space and data processing equipment. Minimum future rental commitments under
noncancelable leases at December 31, 1994, were $403 million in 1995, $370
million in 1996, $341 million in 1997, $321 million in 1998, $299 million in
1999 and $1,693 million thereafter. The Corporation, as a lessee, has no
material lease agreements classified as capital leases.
Amortization of deferred insurance acquisition costs charged to operations
in 1994, 1993 and 1992 was $945 million, $817 million and $624 million,
respectively.
NOTE 16. INCOME TAXES
The provision for income taxes is summarized in the following table.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Estimated taxes payable...................................... $447 $221 $307
Effect of temporary differences.............................. 431 428 102
Investment tax credit amortized.............................. (14) (7) (5)
---- ---- ----
$864 $642 $404
==== ==== ====
</TABLE>
GE Company files a consolidated U.S. federal income tax return which
includes GE Capital Services. The provision for income taxes includes the effect
of the Corporation and its affiliates on the consolidated return.
A reconciliation of the Corporation's actual income tax rate to the U.S.
federal statutory rate follows.
<TABLE>
<CAPTION>
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
U.S. federal statutory income tax rate......................... 35.0% 35.0% 34.0%
Increase (reduction) in rate resulting from:
Rate increase -- deferred taxes........................... -- 5.2 --
Tax-exempt income......................................... (6.9) (8.3) (9.6)
Change in tax-rate assumptions for leveraged leases....... (1.0) (1.6) (2.5)
State and local taxes..................................... 1.6 0.7 0.7
Other -- net.............................................. 0.6 (1.9) 0.7
---- ---- ----
Actual income tax rate......................................... 29.3% 29.1% 23.3%
==== ==== ====
</TABLE>
Page 25
<PAGE> 28
The tax effects of principal temporary differences follow:
<TABLE>
<CAPTION>
(In millions) 1994 1993
------- -------
<S> <C> <C>
Assets
Provision for losses........................................ $ (876) $ (831)
Net unrealized losses on investment securities.............. (468) --
Insurance reserves.......................................... (460) (370)
Other....................................................... (838) (896)
------- -------
Total deferred tax assets........................................ (2,642) (2,097)
------- -------
Liabilities
Financing leases............................................ 5,075 4,917
Operating leases............................................ 1,234 966
Tax transfer leases......................................... 338 340
Net unrealized gains on investment securities............... -- 438
Other....................................................... 932 917
------- -------
Total deferred tax liabilities................................... 7,579 7,578
------- -------
Net deferred tax liability....................................... $ 4,937 $ 5,481
======= =======
</TABLE>
Page 26
<PAGE> 29
NOTE 17. INDUSTRY SEGMENT DATA
Industry segment operating data and identifiable assets for continuing
operations are shown below. Corporate level expenses principally include
interest expense related to acquisition debt.
<TABLE>
<CAPTION>
(In millions) 1994 1993 1992
-------- -------- --------
<S> <C> <C> <C>
Earned income:
Specialty Insurance......................................... $ 4,926 $ 4,862 $ 3,863
Consumer Services........................................... 5,508 4,061 3,342
Equipment Management........................................ 5,209 4,323 3,387
Mid-Market Financing........................................ 1,575 1,472 1,283
Specialized Financing....................................... 2,640 2,543 2,532
-------- -------- --------
19,858 17,261 14,407
Corporate................................................ 17 15 11
-------- -------- --------
Total earned income........................................... $ 19,875 $ 17,276 $ 14,418
======== ======== ========
Segment operating profit:
Specialty Insurance......................................... $ 589 $ 770 $ 641
Consumer Services........................................... 1,067 709 609
Equipment Management........................................ 624 246 488
Mid-Market Financing........................................ 435 406 234
Specialized Financing....................................... 536 366 35
-------- -------- --------
Total segment operating profit................................ 3,251 2,497 2,007
Corporate................................................ (302) (288) (272)
-------- -------- --------
Earnings from continuing operations before income taxes....... 2,949 2,209 1,735
Provision for income taxes.................................... 864 642 404
-------- -------- --------
Net earnings from continuing operations....................... $ 2,085 $ 1,567 $ 1,331
======== ======== ========
Identifiable assets at December 31:
Specialty Insurance......................................... $ 22,058 $ 18,915 $ 14,624
Consumer Services........................................... 54,171 45,773 24,466
Equipment Management........................................ 23,250 19,968 17,700
Mid-Market Financing........................................ 16,362 14,011 12,351
Specialized Financing....................................... 28,183 27,102 27,691
Corporate................................................... 943 868 2,178
-------- -------- --------
Total assets of continuing operations......................... $144,967 $126,637 $ 99,010
======== ======== ========
</TABLE>
Page 27
<PAGE> 30
NOTE 18. QUARTERLY FINANCIAL DATA (UNAUDITED)
Summarized quarterly financial data are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------------------------------------------------------
MARCH JUNE SEPTEMBER DECEMBER
--------------- --------------- --------------- ---------------
(In millions) 1994 1993 1994 1993 1994 1993 1994 1993
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Earned income.......................... $4,393 $3,710 $4,730 $4,001 $5,097 $4,340 $5,655 $5,225
Expenses:
Interest............................. 1,011 791 1,083 879 1,128 894 1,323 974
Operating and administrative......... 1,442 1,217 1,500 1,266 1,386 1,314 1,872 1,847
Insurance losses and policyholder and
annuity benefits................... 693 545 779 692 1,089 809 946 1,126
Provision for losses on financing
receivables........................ 170 255 251 292 186 200 266 240
Depreciation and amortization of
buildings and equipment and
equipment on operating leases...... 385 341 383 366 426 376 468 509
Minority interest in net earnings of
consolidated affiliates.............. 24 19 50 26 25 53 40 36
------ ------ ------ ------ ------ ------ ------ ------
Earnings from continuing operations
before income taxes.................. 668 542 684 480 857 694 740 493
Provision for income taxes............. 187 148 189 124 242 272 246 98
------ ------ ------ ------ ------ ------ ------ ------
Earnings from continuing operations.... 481 394 495 356 615 422 494 395
Earnings (loss) from discontinued
operations........................... (151) 57 (32) 58 (89) 71 (917) 54
------ ------ ------ ------ ------ ------ ------ ------
Net earnings (loss).................... $ 330 $ 451 $ 463 $ 414 $ 526 $ 493 $ (423) $ 449
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
First quarter 1994 discontinued operations included a $210 million ($350
million before tax) charge resulting from the discovery of false trading profits
created by the then head U.S. government securities trader at Kidder, Peabody &
Co. Incorporated, a subsidiary of Kidder, Peabody. Approximately $143 million
($238 million before tax) of the charge related to periods prior to 1994.
NOTE 19. RESTRICTED NET ASSETS OF AFFILIATES
Various state and foreign regulations require that the Corporation's investment
in certain affiliates be maintained at specified minimum levels to provide
additional protection for insurance customers, investment certificate holders
and passbook savings depositors. At December 31, 1994 and 1993, such minimum
investment levels approximated $5,828 million and $6,363 million, respectively.
NOTE 20. SUPPLEMENTAL CASH FLOW INFORMATION
Cash used in 1994, 1993 and 1992 included interest paid by the Corporation of
$4,150 million, $3,281 million and $3,511 million, respectively, and income
taxes paid by the Corporation of $321 million, $189 million and $97 million,
respectively.
NOTE 21. ADDITIONAL INFORMATION ABOUT FINANCIAL INSTRUMENTS
This note contains estimated fair values of certain financial instruments to
which the Corporation is a party. Apart from the Corporation's own borrowings
and certain marketable securities, relatively few of these instruments are
actively traded. Thus, fair values must often be determined using one or more
models that indicate value based on estimates of quantifiable characteristics as
of a particular date. Because this undertaking is, by its nature, difficult and
highly judgmental, for a limited number of instruments, alternative valuation
techniques may have produced disclosed values different from those that could
have been realized at December 31, 1994 or 1993. Moreover, the disclosed values
are representative of fair values only as of the dates indicated. Assets that,
as a matter of accounting policy, are reflected in the accompanying financial
statements at fair value are not included in the following disclosures; such
assets include cash and equivalents, investment securities, and other
receivables.
Values are estimated as follows:
TIME SALES AND LOANS. Based on quoted market prices, recent transactions and/or
discounted future cash flows, using rates at which similar loans would have been
made to similar borrowers.
Page 28
<PAGE> 31
INVESTMENTS IN AND ADVANCES TO ASSOCIATED COMPANIES. Based on market
comparables, recent transactions or discounted future cash flows. These equity
interests were generally acquired in connection with financing transactions and,
for the purpose of this disclosure, fair values were estimated.
BORROWINGS. Based on quoted market prices or market comparables. Fair values of
interest rate and currency swaps on borrowings are based on quoted market prices
and include the effects of counterparty creditworthiness.
ANNUITY BENEFITS. Based on expected future cash flows, discounted at currently
offered discount rates for immediate annuity contracts or cash surrender value
for single premium deferred annuities.
FINANCIAL GUARANTIES. Based on future cash flows, considering expected renewal
premiums, claims, refunds and servicing costs, discounted at a market rate.
ALL OTHER INSTRUMENTS. Based on comparable transactions, market comparables,
discounted future cash flows, quoted market prices, and/or estimates of the cost
to terminate or otherwise settle obligations to counterparties.
Information about financial instruments that were not carried at fair value
at December 31, 1994 and 1993, is shown below.
<TABLE>
<CAPTION>
1994 1993
----------------------------------------- -----------------------------------------
ESTIMATED FAIR ESTIMATED FAIR
CARRYING VALUE CARRYING VALUE
NOTIONAL AMOUNT ------------------- NOTIONAL AMOUNT -------------------
(In millions) AMOUNT (NET) HIGH LOW AMOUNT (NET) HIGH LOW
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Time sales and loans....... $ (c) $ 48,529 $ 49,496 $ 48,840 $ (c) $ 39,556 $ 41,182 $ 40,490
Investments in and advances
to associated
companies................ (c) 2,098 2,561 2,381 (c) 1,574 2,320 2,156
Other cash financial
instruments.............. (c) 1,897 2,026 1,924 (c) 6,226 6,392 6,238
Liabilities
Borrowings and related
instruments
Borrowings(a)(b)......... (c) (91,399) (89,797) (89,797) (c) (81,052) (82,184) (82,184)
Interest rate swaps...... 24,129 -- 135 131 13,724 -- (308) (308)
Currency swaps........... 12,183 -- 83 83 8,101 -- (32) (32)
Annuity benefits........... (c) (13,186) (12,788) (12,788) (c) (8,894) (8,660) (8,660)
Financial guaranties of
insurance
affiliates(d)............ 119,426 (1,344) (269) (348) 111,171 (1,312) (135) (220)
Other financial guaranties... 3,508 (44) (53) (53) 3,647 (42) (64) (66)
Mortgage-related positions
Mortgage purchase
commitments.............. 205 -- (2) (2) 3,950 -- (41) (41)
Mortgage sale commitments.. 1,792 -- 2 2 6,426 -- 49 49
Memo: mortgages held for
sale(e)................ (c) 1,764 1,764 1,764 (c) 5,963 5,983 5,972
Other financial instruments
Loan commitments........... 13,489 -- (71) (125) 10,421 (18) (31) (34)
Foreign currency forwards
and options.............. 3,372 -- 12 12 1,833 -- (2) (2)
Other financial
instruments.............. 314 14 56 53 1,132 4 15 14
</TABLE>
---------------
(a) See Note 9.
(b) Includes interest rate and currency swaps.
(c) Not applicable.
(d) See Note 10.
(e) Included in other cash financial instruments.
FOREIGN CURRENCY FORWARDS AND FOREIGN CURRENCY OPTIONS are employed by the
Corporation to manage certain exposures to changes in currency exchange rates
associated with net investments in foreign affiliates. However, net investments
in foreign affiliates are managed principally by funding local currency
denominated assets with debt denominated in those same currencies.
Page 29
<PAGE> 32
NOTE 22. GEOGRAPHIC SEGMENT INFORMATION
Geographic segment operating data and total assets are as follows.
<TABLE>
<CAPTION>
EARNED INCOME OPERATING PROFIT
----------------------------- ------------------------
(In millions) 1994 1993 1992 1994 1993 1992
-------- -------- ------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
United States............................. $ 16,128 $ 14,746 $12,405 $2,321 $2,046 $1,561
Other areas of the world.................. 3,747 2,530 2,013 628 163 174
-------- -------- ------- ------ ------ ------
Total................................... $ 19,875 $ 17,276 $14,418 $2,949 $2,209 $1,735
======== ======== ======= ====== ====== ======
</TABLE>
<TABLE>
<CAPTION>
TOTAL ASSETS
-----------------------------
(In millions) 1994 1993 1992
-------- -------- -------
<S> <C> <C> <C>
United States............................. $123,510 $115,245 $89,662
Other areas of the world.................. 21,457 11,392 9,348
-------- -------- -------
Total................................... $144,967 $126,637 $99,010
======== ======== =======
</TABLE>
U.S. amounts were derived from the Corporation's operations located in the
U.S.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable
Page 30
<PAGE> 33
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Omitted
ITEM 11. EXECUTIVE COMPENSATION.
Omitted
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Omitted
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Omitted
Page 31
<PAGE> 34
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
<TABLE>
<S> <C>
(a) 1. FINANCIAL STATEMENTS
Included in Part II of this report:
Independent Auditors' Report
Statement of Current and Retained Earnings for each of the years in the three-year
period ended December 31, 1994
Statement of Financial Position at December 31, 1994 and 1993
Statement of Cash Flows for each of the years in the three-year period ended December
31, 1994
Notes to Consolidated Financial Statements
(a) 2. FINANCIAL STATEMENT SCHEDULES
I. Condensed financial information of registrant.
V. Supplemental information concerning property and casualty insurance operations.
</TABLE>
All other schedules are omitted because of the absence of conditions
under which they are required or because the required information is
shown in the financial statements or notes thereto.
(a) 3. EXHIBIT INDEX
The exhibits listed below, as part of Form 10-K, are numbered in conformity
with the numbering used in Item 601 of Regulation S-K of the Securities and
Exchange Commission.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
--------- -----------
<S> <C>
3 (i) A complete copy of the Certificate of Incorporation of
the Corporation as last amended on February 10, 1993
and currently in effect. (Incorporated by reference
to Exhibit 3 (i) of the Corporation's Form 10-K
Report for the year ended December 31, 1993.)
3 (ii) A complete copy of the By-Laws of the Corporation as
last amended on June 30, 1994 and currently in
effect.
4 (iii) Agreement to furnish to the Securities and Exchange
Commission upon request a copy of instruments
defining the rights of holders of certain long-term
debt of the registrant and all subsidiaries for which
consolidated or unconsolidated financial statements
are required to be filed.
12(a) Computation of ratio of earnings to fixed charges.
12(b) Computation of ratio of earnings to combined fixed
charges and preferred stock dividends.
23(ii) Consent of KPMG Peat Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedule (filed electronically
herewith).
99 Income Maintenance Agreement dated March 28, 1991
between General Electric Company and General Electric
Capital Corporation. (Incorporated by reference to
Exhibit 28 of the Corporation's Form 10-K Report for
the year ended December 31, 1992).
</TABLE>
(b) REPORTS ON FORM 8-K
None.
Page 32
<PAGE> 35
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT
GENERAL ELECTRIC CAPITAL SERVICES, INC.
CONDENSED STATEMENT OF FINANCIAL POSITION
<TABLE>
<CAPTION>
(In millions) DECEMBER 31,
--------------------
1994 1993
------- -------
<S> <C> <C>
ASSETS
Cash and equivalents..................................................... $ 5 $ 100
Investment securities.................................................... -- 100
Receivables -- net....................................................... 14 --
Investment in and advances to affiliates................................. 12,640 13,748
------- -------
Total assets............................................................. $12,659 $13,948
======= =======
LIABILITIES AND EQUITY
Notes payable within one year............................................ $ 2,498 $ 2,340
Accounts and drafts payable.............................................. 235 211
Other liabilities........................................................ 46 78
------- -------
Total liabilities................................................... 2,779 2,629
------- -------
Cumulative preferred stock, $10,000 par value (80,000 shares authorized;
51,000 shares issued and held primarily by affiliates at December 31,
1994 and 1993)......................................................... 510 510
Common stock, $10,000 par value (101 shares authorized and
outstanding)........................................................... 1 1
Additional paid-in capital............................................... 2,064 1,877
Retained earnings........................................................ 8,194 8,212
Unrealized gains (losses) on investment securities held by affiliates.... (821) 812
Foreign currency translation adjustments................................. (68) (93)
------- -------
Total equity........................................................ 9,880 11,319
------- -------
Total liabilities and equity............................................. $12,659 $13,948
======= =======
</TABLE>
See Notes to Condensed Financial Statements.
Page 33
<PAGE> 36
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- (CONTINUED)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
CONDENSED STATEMENT OF CURRENT AND RETAINED EARNINGS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
(In millions) 1994 1993 1992
------ ------ ------
<S> <C> <C> <C>
Earned income.................................................. $ -- $ -- $ --
------ ------ ------
Expenses:
Interest..................................................... 132 91 77
Operating and administrative................................. 128 211 185
------ ------ ------
Loss before income taxes and equity in earnings of
affiliates................................................... (260) (302) (262)
Income tax benefit............................................. 80 87 67
Equity in earnings from continuing operations of affiliates.... 2,265 1,782 1,526
------ ------ ------
Net earnings from continuing operations........................ 2,085 1,567 1,331
Net earnings (loss) from discontinued operations............... (1,189) 240 168
------ ------ ------
Net earnings................................................... 896 1,807 1,499
Dividends paid................................................. (914) (610) (500)
Retained earnings at January 1................................. 8,212 7,015 6,016
------ ------ ------
Retained earnings at December 31............................... $8,194 $8,212 $7,015
====== ====== ======
</TABLE>
See Notes to Condensed Financial Statements.
Page 34
<PAGE> 37
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- (CONTINUED)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
(In millions) 1994 1993 1992
----- ----- -----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES................................. $ 549 $ 412 $ 387
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Change in investment and advances to affiliates.................... 16 18 --
Net change in investment securities................................ 100 (100) 41
Net change in other receivables.................................... (14) 26 (25)
----- ----- -----
Cash provided from (used for) investing activities................. 102 (56) 16
----- ----- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in borrowings (less than 90-day maturities)............. 158 351 99
Dividends paid..................................................... (904) (610) (500)
----- ----- -----
Cash used for financing activities................................. (746) (259) (401)
INCREASE (DECREASE) IN CASH AND EQUIVALENTS DURING THE YEAR.......... (95) 97 2
CASH AND EQUIVALENTS AT BEGINNING OF YEAR............................ 100 3 1
----- ----- -----
CASH AND EQUIVALENTS AT END OF YEAR.................................. $ 5 $ 100 $ 3
===== ===== =====
</TABLE>
See Notes to Condensed Financial Statements.
Page 35
<PAGE> 38
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT -- (CONCLUDED)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
INCOME TAXES
GE Company files a consolidated U.S. federal income tax return which
includes GE Capital Services. Income tax benefit includes the effect of GE
Capital Services on the consolidated return.
DIVIDENDS FROM AFFILIATES
In 1994 and 1993, GE Capital Services received dividends of $150 million
and $150 million, respectively, from Employers Reinsurance and $575 million and
$460 million, respectively, from GE Capital.
DISCONTINUED OPERATIONS
In November 1994, GE Capital Services elected to terminate the operations
of Kidder, Peabody Group Inc. by initiating an orderly liquidation of its assets
and liabilities. As part of the liquidation plan, GE Capital Services received
securities of Paine Webber Group Inc. valued at $657 million in exchange for
certain broker-dealer assets and operations.
Page 36
<PAGE> 39
GENERAL ELECTRIC CAPITAL SERVICES, INC. AND CONSOLIDATED AFFILIATES
SCHEDULE V -- SUPPLEMENTAL INFORMATION CONCERNING
PROPERTY AND CASUALTY INSURANCE OPERATIONS
(IN MILLIONS)
<TABLE>
<CAPTION>
DISCOUNT CLAIMS AND CLAIM
RESERVES DEDUCTED ADJUSTMENT EXPENSES
FOR UNPAID FROM
DEFERRED CLAIMS AND UNPAID INCURRED RELATED TO
POLICY CLAIMS LOSSES NET --------------------
ACQUISITION ADJUSTMENT AND LOSS UNEARNED EARNED INVESTMENT PRIOR
COSTS EXPENSES EXPENSES PREMIUMS PREMIUMS INCOME CURRENT YEAR YEARS
----------- ---------- --------- -------- -------- ---------- ------------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994............... $ 581 $6,911 $27 $2,372 $3,375 $721 $1,885 $558
========== ========== ========= ========= ========= ========== ============ =====
December 31, 1993............... $ 403 $6,405 $21 $1,639 $3,301 $594 $2,040 $359
========== ========== ========= ========= ========= ========== ============ =====
December 31, 1992............... $ 365 $4,293 $30 $1,538 $2,427 $578 $1,628 $112
========== ========== ========= ========= ========= ========== ============ =====
<CAPTION>
AMORTIZATION PAID
OF DEFERRED CLAIMS AND
POLICY CLAIM
ACQUISITION ADJUSTMENT PREMIUMS
COSTS EXPENSES WRITTEN
------------ ---------- --------
<S> <C> <C> <C>
December 31, 1994............... $606 $1,946 $3,514
============ ========== =========
December 31, 1993............... $550 $1,425 $3,547
============ ========== =========
December 31, 1992............... $463 $1,392 $2,636
============ ========== =========
</TABLE>
Page 37
<PAGE> 40
EXHIBIT 4(III)
March 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Subject: General Electric Capital Services, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 -- File No. 0-14804
Dear Sirs:
Neither General Electric Capital Services, Inc. (the "Corporation") nor any
of its subsidiaries has outstanding any instrument with respect to its long-term
debt under which the total amount of securities authorized exceeds 10% of the
total assets of the registrant and its subsidiaries on a consolidated basis. In
accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K (17 CFR
sec. 229.601), the Corporation hereby agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of each instrument which defines the
rights of holders of such long-term debt.
Very truly yours,
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By:/s/ J. A. PARKE
------------------------------------
J. A. Parke,
Senior Vice President, Finance
Page 38
<PAGE> 41
EXHIBIT 12(A)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
(Dollar amounts in millions) 1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations................. $2,085 $1,567 $1,331 $1,215 $1,125
Provision for income taxes.......................... 864 642 404 317 319
Minority interest................................... 139 134 40 33 46
Cumulative effect to January 1, 1991, of accounting
change for postretirement benefits other than
pensions.......................................... -- -- -- 6 --
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change................................. 3,088 2,343 1,775 1,571 1,490
------ ------ ------ ------ ------
Fixed charges:
Interest.......................................... 4,598 3,585 3,780 4,413 4,497
One-third of rentals.............................. 156 138 92 36 33
------ ------ ------ ------ ------
Total fixed charges................................. 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Less interest capitalized, net of amortization...... 9 4 6 7 19
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change, plus fixed charges............. $7,833 $6,062 $5,641 $6,013 $6,001
====== ====== ====== ====== ======
Ratio of earnings to fixed charges.................. 1.65 1.63 1.46 1.35 1.32
====== ====== ====== ====== ======
</TABLE>
Page 39
<PAGE> 42
EXHIBIT 12(B)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
(Dollar amounts in millions) 1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations.................. $2,085 $1,567 $1,331 $1,215 $1,125
Provision for income taxes........................... 864 642 404 317 319
Minority interest.................................... 139 134 40 33 46
Cumulative effect to January 1, 1991, of accounting
change for postretirement benefits other than
pensions........................................... -- -- -- 6 --
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change.................................. 3,088 2,343 1,775 1,571 1,490
------ ------ ------ ------ ------
Fixed charges:
Interest........................................... 4,598 3,585 3,780 4,413 4,497
One-third of rentals............................... 156 138 92 36 33
------ ------ ------ ------ ------
Total fixed charges.................................. 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Less interest capitalized, net of amortization....... 9 4 6 7 19
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change, plus fixed charges.............. $7,833 $6,062 $5,641 $6,013 $6,001
====== ====== ====== ====== ======
Preferred stock dividend requirements................ $ 1 $ -- $ -- $ -- $ --
Ratio of earnings from continuing operations before
provisions for income taxes to earnings from
continuing operations.............................. 1.41 -- -- -- --
------ ------ ------ ------ ------
Preferred stock dividend factor on pre-tax basis..... 1 -- -- -- --
Fixed charges........................................ 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Total fixed charges and preferred stock dividend
requirements....................................... $4,755 $3,723 $3,872 $4,449 $4,530
====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges and
preferred stock dividends.......................... 1.65 1.63 1.46 1.35 1.32
====== ====== ====== ====== ======
</TABLE>
Page 40
<PAGE> 43
EXHIBIT 23(II)
To the Board of Directors
General Electric Capital Services, Inc.
We consent to incorporation by reference in the Registration Statement on
Form S-3 (No. 33-7348) of General Electric Capital Services, Inc. of our report
dated February 10, 1995, relating to the statement of financial position of
General Electric Capital Services, Inc. and consolidated affiliates as of
December 31, 1994 and 1993 and the related statements of current and retained
earnings and cash flows and related schedules for each of the years in the
three-year period ended December 31, 1994, which report appears in the December
31, 1994 annual report on Form 10-K of General Electric Capital Services, Inc.
Our report refers to a change in 1993 in the method of accounting for
investments in certain securities.
/s/ KPMG PEAT MARWICK LLP
Stamford, Connecticut
March 31, 1995
Page 41
<PAGE> 44
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being
directors and/or officers of General Electric Capital Services, Inc., a Delaware
corporation (the "Corporation"), hereby constitutes and appoints Gary C. Wendt,
James A. Parke, Joan C. Amble and Burton J. Kloster, Jr., and each of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign one or more Annual Reports for the Corporation's fiscal year
ended December 31, 1994, on Form 10-K under the Securities Exchange Act of 1934,
as amended, or such other form as such attorney-in-fact may deem necessary or
desirable, any amendments thereto, and all additional amendments thereto in such
form as they or any one of them may approve, and to file the same with all
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done to the end that such Annual Report or
Annual Reports shall comply with the Securities Exchange Act of 1934, as
amended, and the applicable Rules and Regulations of the Securities and Exchange
Commission adopted or issued pursuant thereto, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them or their or his
substitute or resubstitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this
29th day of March, 1995.
<TABLE>
<S> <C>
/s/ GARY C. WENDT /s/ JAMES A. PARKE
------------------------------------------ ------------------------------------------
Gary C. Wendt, James A. Parke,
Chairman of the Board, Senior Vice President, Finance
President and Chief Executive Officer (Principal Financial Officer)
(Principal Executive Officer)
</TABLE>
/s/ JOAN C. AMBLE
---------------------------------------------------
Joan C. Amble
Vice President and Controller
(Principal Accounting Officer)
<TABLE>
<S> <C>
/s/ KAJ AHLMANN /s/ HUGH J. MURPHY
------------------------------------------ ------------------------------------------
Kaj Ahlmann, Director Hugh J. Murphy, Director
/s/ NIGEL D. T. ANDREWS /s/ DENIS J. NAYDEN
------------------------------------------ ------------------------------------------
Nigel D. T. Andrews, Director Denis J. Nayden, Director
/s/ JAMES R. BUNT /s/ MICHAEL A. NEAL
------------------------------------------ ------------------------------------------
James R. Bunt, Director Michael A. Neal, Director
/s/ DENNIS D. DAMMERMAN /s/ JOHN M. SAMUELS
------------------------------------------ ------------------------------------------
Dennis D. Dammerman, Director John M. Samuels, Director
/s/ PAOLO FRESCO /s/ EDWARD D. STEWART
------------------------------------------ ------------------------------------------
Paolo Fresco, Director Edward D. Stewart, Director
/s/ DALE F. FREY /s/ JOHN F. WELCH, JR.
------------------------------------------ ------------------------------------------
Dale F. Frey, Director John F. Welch, Jr., Director
------------------------------------------
Benjamin W. Heineman, Jr., Director
</TABLE>
A MAJORITY OF THE BOARD OF DIRECTORS
Page 42
<PAGE> 45
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
<TABLE>
<S> <C>
GENERAL ELECTRIC CAPITAL SERVICES, INC.
March 29, 1995 By: /s/ GARY C. WENDT
---------------------------------------------------
(GARY C. WENDT)
PRESIDENT
</TABLE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ GARY C. WENDT Chairman of the Board, March 29, 1995
------------------------------------------ President and Chief Executive
(GARY C. WENDT) Officer (Principal Executive
Officer)
/s/ JAMES A. PARKE Senior Vice President, Finance March 29, 1995
------------------------------------------ (Principal Financial Officer)
(JAMES A. PARKE)
/s/ JOAN C. AMBLE Vice President and Controller March 29, 1995
------------------------------------------ (Principal Accounting Officer)
(JOAN C. AMBLE)
KAJ AHLMANN Director
NIGEL D. T. ANDREWS Director
JAMES R. BUNT Director
DENNIS D. DAMMERMAN Director
PAOLO FRESCO Director
DALE F. FREY Director
HUGH J. MURPHY Director /s/ JOAN C. AMBLE
------------------------------
DENIS J. NAYDEN Director (JOAN C. AMBLE)
Attorney-in-fact
MICHAEL A. NEAL Director March 29, 1995
JOHN M. SAMUELS Director
EDWARD D. STEWART Director
JOHN F. WELCH, JR. Director
</TABLE>
A majority of the Board of Directors
Page 43
<PAGE> 46
File No. 0-14804
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
------------------
GENERAL ELECTRIC CAPITAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
------------------
EXHIBITS
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE> 47
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
-------- --------------------------------------------------------------------
<S> <C>
3 (i) A complete copy of the Certificate of Incorporation of the
Corporation as last amended on February 10, 1993 and currently in
effect. (Incorporated by reference to Exhibit 3 (i) of the
Corporation's Form 10-K Report for the year ended December 31,
1993.)
3 (ii) A complete copy of the By-Laws of the Corporation as last amended on
June 30, 1994 and currently in effect.
4 (iii) Agreement to furnish to the Securities and Exchange Commission upon
request a copy of instruments defining the rights of holders of
certain long-term debt of the registrant and all subsidiaries for
which consolidated or unconsolidated financial statements are
required to be filed.
12(a) Computation of ratio of earnings to fixed charges.
12(b) Computation of ratio of earnings to combined fixed charges and
preferred stock dividends.
23(ii) Consent of KPMG Peat Marwick LLP.
24 Power of Attorney.
27 Financial Data Schedule (filed electronically herewith).
99 Income Maintenance Agreement dated March 28, 1991 between General
Electric Company and General Electric Capital Corporation.
(Incorporated by reference to Exhibit 28 of the Corporation's Form
10-K Report for the year ended December 31, 1992).
</TABLE>
<PAGE> 1
EXHIBIT 3(II)
BY-LAWS
of
GENERAL ELECTRIC CAPITAL SERVICES, INC.
ARTICLE 1. Meetings of Stockholders.
Section 1.1. Annual Meetings. The annual meeting of stockholders for
the election of directors and the transaction of such other business as may
properly come before it shall be held at such place as shall be stated in the
notice of the meeting, such meeting to be held on the second Thursday in March
of each and every year if not a legal holiday, and if a legal holiday, then on
the next secular day following, or such other date as shall be designated from
time to time by the board of directors and stated in the notice of the meeting,
at such time as shall be stated in the notice of the meeting.
Section 1.2. Special Meetings. Except as otherwise prescribed by the
General Corporation Law of Delaware, special meetings of the stockholders for
any purpose or purposes may be called (and the location and time thereof
designated) by the President, and shall be called (and the location and time
thereof designated) by the Secretary at the request in writing of a majority of
the board of directors or of stockholders owning not less than a majority of
the outstanding shares of Common Stock of the Corporation.
Section 1.3. Quorum. The holders of record as of the pertinent record
date of a majority of the outstanding shares of Common Stock of the Corporation
shall be present or represented by proxy in order to constitute a quorum at any
meeting of the stockholders of the Corporation for the transaction of any
business.
Section 1.4. Voting. When a quorum is present at any meeting of the
stockholders, the vote of the holders of a majority of the shares of Common
Stock present or represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which a different vote is
required by any provision of the General Corporation Law of Delaware, the
Certificate ofIncorporation or these by-laws, in which case such provision
shall govern and control the decision of such question.
ARTICLE 2. Directors.
Section 2.1. Number and Election. The board of directors shall
consist of that number of members as shall be fixed, from time to time, by the
stockholders or by the board of directors. Directors shall be elected (i) at
the annual meeting of stockholders as provided in Section 1.1 hereof by the
plurality of votes of shares represented in person or by proxy, or (ii) by a
majority of the board of directors as provided in Section 2.3 hereof.
<PAGE> 2
Section 2.2. Removal. Any one or more of the directors of the
Corporation may be removed at any time, either with or without cause, by a vote
at a special meeting of stockholders called pursuant to Section 1.2 hereof of
the holders of record of at least a majority of the outstanding shares of
Common Stock of the Corporation, and thereupon the term of the director or
directors who shall have been so removed shall forthwith terminate and there
shall be a vacancy or vacancies in the board of directors.
Section 2.3. Vacancies. Vacancies, and newly created directorships
resulting from any increase in the authorized number of directors, may be
filled by a majority of the directors then in office, although less than a
quorum, or by a sole remaining director, and each director so elected shall
hold office, unless sooner displaced, until the next annual election of
directors by the stockholders and until his successor shall be duly elected and
qualified.
Section 2.4. Regular Meetings. Regular meetings of the board of
directors shall be held periodically on such dates as the board of directors
may designate.
Section 2.5. Special Meetings. Special meetings of the board of
directors may be called by the President, and shall be called by the President
or the Secretary at the request of any two directors, to be held at such time
and place as shall be designated in the notice of such meeting.
Section 2.6. Notice of Special Meetings. Except as otherwise
prescribed by the General Corporation Law of Delaware, notice shall consist of
any communication reasonably calculated to inform each director of the place,
date, and hour of each special meeting of the board of directors at least two
days prior to the time of holding the meeting.
Section 2.7. Manner of Notice. In addition to any other manner of
giving notice permitted by the General Corporation Law of Delaware and these
by-laws, whenever notice is required to be given to any director, or any member
of any committee designated by the board of directors, such requirement for
notice shall not be construed to require personal delivery and such requirement
for notice shall be deemed satisfied when, as far in advance of the event with
respect to which notice is required as constitutes the minimum notice period
required by the General Corporation Law of Delaware or these by-laws, (i)
written notice is deposited in the United States mails, postage prepaid,
directed to (or delivered to a telegraph company, charges prepaid, for
transmission to) such director or committee member either at the address of
such director or committee member as it appears on the books of the Corporation
or at such person's business address, or (ii) actual notice is received orally
or in writing by the person entitled thereto.
-2-
<PAGE> 3
Section 2.8. Quorum. At each meeting of the board of directors, the
presence of that number of directors necessary to constitute a quorum, as
established from time to time by resolution of the board of directors, shall be
necessary and sufficient for the transaction of any business, and the act of a
majority of directors present at a meeting at which a quorum is present shall
be the act of the board of directors, except as otherwise specifically required
by statute, by these bylaws, or by the certificate of incorporation.
Section 2.9. Presumption of Assent. Unless otherwise provided by the
General Corporation Law of Delaware, a director of the Corporation who is
present at a meeting of the board of directors at which action is taken on any
corporate matter shall be presumed to have assented to the action taken unless
his dissent shall be entered in the minutes of the meeting or unless he shall
file his written dissent to such action with the person acting as secretary of
the meeting before the adjournment thereof or shall forward such dissent by
registered mail to the Secretary of the Corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply to a director
who voted in favor of such action.
Section 2.10. Committees. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more committees of
the board, each such committee to consist of one or more of the directors of
the Corporation. The board may designate one or more directors as alternate
members of any such committee, who may replace any absent or disqualified
member at any meeting of the committee.
The board of directors may, by resolution passed by a majority of the
whole board, also designate one or more committees to the board, each such
committee to consist of directors and/or officers of the Corporation. The board
may designate one or more directors and/or officers as alternate members of any
such committee, who may replace any absent or disqualified member at any
meeting of the committee.
Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
Corporation, and may authorize the seal of the Corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting
an agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders a dissolution of the
Corporation or a revocation of a dissolution, or amending the by-laws of the
Corporation. Any executive committee designated by the board of directors shall
have the power
-3-
<PAGE> 4
and authority to declare dividends and to authorize the issuance of stock.
Such committee or committees shall have such name or names as may be determined
from time to time by resolution adopted by the board of directors.
Section 2.11. Telecommunication Meetings. Unless otherwise
restricted by the certificate of incorporation or these by-laws, members of the
board of directors, or any committee designated by the board of directors, may
participate in a meeting of the board of directors, or any committee, by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and such
participation in a meeting shall constitute presence in person at the meeting.
ARTICLE 3. Officers.
Section 3.1. Number. The officers of the Corporation, each of whom
shall be elected by the board of directors, may include a Chairman of the
Board, one or more Vice Chairmen of the Board, a President, an Executive Vice
President, one or more Vice Presidents, a Secretary, a Treasurer and such
Assistant Secretaries and Assistant Treasurers as the board of directors may
deem necessary. The board of directors may create such other office or offices
from time to time as shall in their judgment be necessary or convenient and
shall have the power to prescribe the duties and authority of the officers
elected thereto by the board of directors. Any two or more offices, except
those of President and Secretary, may be held by one person.
Section 3.2. Chairman of the Board of Directors. The Chairman of the
Board shall, when present, preside at the meetings of the stockholders and of
the board of directors. In addition, the Chairman of the Board shall be the
chief executive officer of the Corporation. He shall exercise the powers and
perform the duties usual to the chief executive officer and, subject to the
control and direction of the board of directors, shall have general charge of
the affairs of the Corporation. No non-U.S. citizen shall be qualified or
authorized to be Chairman of the Board or to exercise any powers or duties of
the Chairman of the Board in his absence or during his disability for so long
as the Corporation is required by the U.S. maritime laws to be a U.S. citizen
by reason of its ownership, direct or indirect, or other interest in any vessel
documented under the laws of the United States.
Section 3.3. Vice Chairman of the Board of Directors. In the absence
or disability of the Chairman of the Board, the Vice Chairman of the Board
shall, when present, preside at meetings of the stockholders and of the board
of directors. He shall have supervision of such matters as may be designated to
him by the board of directors.
-4-
<PAGE> 5
Section 3.4. President. The President shall be the chief operating
officer of the Corporation and shall have supervision of such matters as may be
designated to him by the board of directors. No non-U.S. citizen shall be
qualified or authorized to be President or to exercise any powers or duties of
the President in his absence or during his disability for so long as the
Corporation is required by the U.S. maritime laws to be a U.S. citizen by
reason of its ownership, direct or indirect, or other interest in, any vessel
documented under the laws of the United States.
Section 3.5. Vice President. Each Vice President, including the
Executive Vice President, shall perform such duties in such capacities as may
be assigned by the board of directors or the President. In the absence or
incapacity of the President the duties of the office of President shall be
performed by the Executive Vice President, unless and until the board of
directors shall otherwise direct.
Section 3.6. Vice President-Finance. The Vice President-Finance
shall be the chief financial officer of the Corporation and shall be
responsible for all financial matters pertaining to the Corporation and shall
perform such other duties as may be assigned by the President or the board of
directors.
Section 3.7. Secretary. The Secretary shall keep the minutes of all
meetings of the stockholders and of the board of directors, give all notices in
accordance with the provisions of these by-laws or as required by the General
Corporation Law of Delaware, be custodian of the corporate records and the seal
of the Corporation (with power to affix the seal to all documents and attest
the same), have general charge of the stock transfer books of the Corporation,
and perform such other duties as from time to time may be assigned to him by
the President or the board of directors.
Section 3.8. Treasurer. The Treasurer, subject to the direction and
supervision of the President and to such limitations on his authority as the
board of directors may from time to time prescribe, shall have the care and
custody of the funds and securities of the Corporation, sign checks, drafts,
notes and orders for the payment of money, pay out and dispose of the funds and
securities of the Corporation, keep accurate accounts of receipts and
disbursements of such funds and securities and in general perform the duties
customary to the office of treasurer.
Section 3.9. Controller. The Controller shall keep or cause to be
kept correct books of accounts of all of the Corporation's business, and he
shall perform such other duties incident to his office as the board of
directors may empower or direct him to perform, and in such manner as they may
direct from time to time.
-5-
<PAGE> 6
Section 3.10. Assistant Secretaries and Assistant Treasurers. The
Assistant Secretaries and Assistant Treasurers shall perform such duties as
shall be assigned to them by the Secretary or the Treasurer, respectively, or
by the President or the board of directors.
Section 3.11. Term of Office; Removal; Delegation. Except as
hereinafter provided, each officer elected by the board of directors shall hold
office until the next annual meeting of the board of directors and until his
successor is elected. Any officer may be removed at any time with or without
cause by the board of directors. A vacancy in any office caused by the death,
resignation or removal of the person elected thereto or because of the creation
of a new office, or for any other reason, may be filled for the unexpired
portion of the term by election of the board of directors at any meeting. In
case of the absence, disability or refusal to act of any officer of the
Corporation, or for any other reason that the board of directors shall deem
sufficient, the board may delegate, for the time being, the powers and duties,
or any of them, of such officer to any other officer, or to any director. No
officer shall be prevented from receiving a salary by reason of the fact that
he is also a director of the Corporation.
ARTICLE 4. Certificates of Stock and Their Transfer.
Section 4.1. Certificates of Stock. The certificates of stock of the
Corporation shall be in such form as may be determined by the board of
directors, shall be numbered and shall be entered in the books of the
Corporation as they are issued. They shall exhibit the holder's name and number
of shares and shall be signed by the President or a Vice President and by the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer.
If any stock certificate is signed (a) by a transfer agent or an assistant
transfer agent or (b) by a transfer clerk acting on behalf of the Corporation
and a registrar, the signature of any officer of the Corporation may be
facsimile.
Section 4.2. Transfer of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares duly endorsed
or accompanied by proper evidence of succession, assignment or authority to
transfer, and upon payment of applicable taxes with respect to such transfer,
and in compliance with any restrictions on transfer applicable to the
certificate of shares represented thereby of which the Corporation shall have
notice and subject to such rules and regulations as the board of directors may
from time to time deem advisable concerning the transfer and registration of
certificates for shares of capital stock of the Corporation, the Corporation
shall issue a new certificate and record the transaction upon its books.
Transfers of shares on the books of the Corporation shall be made only by the
registered holder thereof or by his attorney or successor duly authorized as
evidenced by documents filed with the Secretary or transfer agent of the
Corporation.
-6-
<PAGE> 7
Section 4.3. No Fractional Share Certificates. Certificates shall
not be issued representing fractional shares of stock.
Section 4.4. Stockholders of Record. The Corporation shall be
entitled to treat the holder of record of any share or shares of stock as the
holder in fact thereof and, accordingly, shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the General Corporation Law of Delaware.
ARTICLE 5. Indemnification.
Section 5.1. Indemnification of Directors and Officers. The
Corporation shall, to the fullest extent permitted by law as the same exists or
may hereafter be in effect, indemnify any person who (i) was or is or has
agreed to become a director or officer of the Corporation and (ii) was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether criminal, civil, administrative
or investigative, by reason of the fact that such person, at the request of the
Corporation, was or is or has agreed to become or has served as a director or
officer of the Corporation or, concurrent therewith, in any capacity with or on
behalf of any other enterprise. Expenses incurred by any such person in
defending any such action, suit or proceeding shall be paid or reimbursed by
the Corporation promptly upon (i) the authorization of such payment or
reimbursement by the President, Chairman of the Board of Directors,
disinterested directors or shareholders of the Corporation and (ii) receipt by
the Corporation of an undertaking by or on behalf of such person to repay such
expenses if it shall ultimately be determined that such person is not entitled
to be indemnified by the Corporation. The right of any such person to be
indemnified and to the payment or reimbursement of expenses incurred in
defending any such action, suit or proceeding in advance of its final
disposition provided in and authorized by this by-law shall (i) extend to the
heirs and legal representatives of such person, (ii) be enforceable against the
Corporation by such person who shall be presumed to have relied thereon in
serving, continuing to serve, or agreeing to serve as a director or officer of
the Corporation, (iii) not be exclusive of any other right which such person
may have or hereafter acquire under any statute, provision of the Certificate
of Incorporation, by-law, agreement, vote of shareholders or disinterested
directors or otherwise and (iv) be retroactive to events occurring prior to the
adoption of this by-law to the extent not prohibited by law. No amendment of
this by-law shall impair the rights of any such person arising at any time with
respect to events occurring prior to such amendment. For purposes of this
by-law: the term "Corporation" shall include any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger; the term "other enterprise" shall include any
corporation of any type or kind, domestic or foreign, or any partnership, joint
venture, trust or employee
-7-
<PAGE> 8
benefit plan; service "at the request of the Corporation" shall include, but
not be limited to, service by any such person as a director or officer of the
Corporation or in any capacity with or on behalf of any such other enterprise
which imposes duties on, or involves services to the Corporation or such other
enterprise by, such person with respect to an employee benefit plan, its
participants or beneficiaries; any excise taxes assessed on any such person
with respect to an employee benefit plan shall be deemed to be indemnifiable
expenses; and action by any such person in good faith with respect to any
employee benefit plan which such person reasonably believes to be in the
interest of the participants and beneficiaries of such plan shall be deemed to
be action not opposed to the best interests of the Corporation.
ARTICLE 6. General Provisions.
Section 6.1. Fiscal Year. The fiscal year of the Corporation shall be
the calendar year.
Section 6.2. Seal. The corporate seal shall have inscribed thereon the
name of the Corporation, and the words "CORPORATE SEAL," "DELAWARE" and "1984."
Such seal may be used by causing it, or a facsimile thereof, to be impressed or
affixed or otherwise reproduced.
ARTICLE 7. Amendments.
Section 7.1. In General. Any provision of these by-laws may be altered,
amended or repealed from time to time by the affirmative vote of the holders of
a majority of the Common Stock present in person or by proxy at any annual
meeting or special meeting of stockholders at which a quorum is present, or by
the affirmative vote of a majority of the directors then qualified and acting
at any regular or special meeting of the board at which a quorum is present;
provided, however, that the stockholders may provide specifically for
limitations on the power of directors to amend particular by-laws and, in such
event, the directors' power of amendment shall be so limited.
-8-
<PAGE> 1
EXHIBIT 4(III)
March 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Subject: General Electric Capital Services, Inc. Annual Report on Form 10-K
for the fiscal year ended December 31, 1994 -- File No. 0-14804
Dear Sirs:
Neither General Electric Capital Services, Inc. (the "Corporation") nor any
of its subsidiaries has outstanding any instrument with respect to its long-term
debt under which the total amount of securities authorized exceeds 10% of the
total assets of the registrant and its subsidiaries on a consolidated basis. In
accordance with paragraph (b)(4)(iii) of Item 601 of Regulation S-K (17 CFR
sec. 229.601), the Corporation hereby agrees to furnish to the Securities and
Exchange Commission, upon request, a copy of each instrument which defines the
rights of holders of such long-term debt.
Very truly yours,
GENERAL ELECTRIC CAPITAL SERVICES, INC.
By:/s/ J. A. PARKE
------------------------------------
J. A. Parke,
Senior Vice President, Finance
<PAGE> 1
EXHIBIT 12(A)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
(Dollar amounts in millions) 1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations................. $2,085 $1,567 $1,331 $1,215 $1,125
Provision for income taxes.......................... 864 642 404 317 319
Minority interest................................... 139 134 40 33 46
Cumulative effect to January 1, 1991, of accounting
change for postretirement benefits other than
pensions.......................................... -- -- -- 6 --
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change................................. 3,088 2,343 1,775 1,571 1,490
------ ------ ------ ------ ------
Fixed charges:
Interest.......................................... 4,598 3,585 3,780 4,413 4,497
One-third of rentals.............................. 156 138 92 36 33
------ ------ ------ ------ ------
Total fixed charges................................. 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Less interest capitalized, net of amortization...... 9 4 6 7 19
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change, plus fixed charges............. $7,833 $6,062 $5,641 $6,013 $6,001
====== ====== ====== ====== ======
Ratio of earnings to fixed charges.................. 1.65 1.63 1.46 1.35 1.32
====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 12(B)
GENERAL ELECTRIC CAPITAL SERVICES, INC.
AND CONSOLIDATED AFFILIATES
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK
DIVIDENDS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
(Dollar amounts in millions) 1994 1993 1992 1991 1990
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings from continuing operations.................. $2,085 $1,567 $1,331 $1,215 $1,125
Provision for income taxes........................... 864 642 404 317 319
Minority interest.................................... 139 134 40 33 46
Cumulative effect to January 1, 1991, of accounting
change for postretirement benefits other than
pensions........................................... -- -- -- 6 --
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change.................................. 3,088 2,343 1,775 1,571 1,490
------ ------ ------ ------ ------
Fixed charges:
Interest........................................... 4,598 3,585 3,780 4,413 4,497
One-third of rentals............................... 156 138 92 36 33
------ ------ ------ ------ ------
Total fixed charges.................................. 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Less interest capitalized, net of amortization....... 9 4 6 7 19
------ ------ ------ ------ ------
Earnings before income taxes, minority interest and
accounting change, plus fixed charges.............. $7,833 $6,062 $5,641 $6,013 $6,001
====== ====== ====== ====== ======
Preferred stock dividend requirements................ $ 1 $ -- $ -- $ -- $ --
Ratio of earnings from continuing operations before
provisions for income taxes to earnings from
continuing operations.............................. 1.41 -- -- -- --
------ ------ ------ ------ ------
Preferred stock dividend factor on pre-tax basis..... 1 -- -- -- --
Fixed charges........................................ 4,754 3,723 3,872 4,449 4,530
------ ------ ------ ------ ------
Total fixed charges and preferred stock dividend
requirements....................................... $4,755 $3,723 $3,872 $4,449 $4,530
====== ====== ====== ====== ======
Ratio of earnings to combined fixed charges and
preferred stock dividends.......................... 1.65 1.63 1.46 1.35 1.32
====== ====== ====== ====== ======
</TABLE>
<PAGE> 1
EXHIBIT 23(II)
To the Board of Directors
General Electric Capital Services, Inc.
We consent to incorporation by reference in the Registration Statement on
Form S-3 (No. 33-7348) of General Electric Capital Services, Inc. of our report
dated February 10, 1995, relating to the statement of financial position of
General Electric Capital Services, Inc. and consolidated affiliates as of
December 31, 1994 and 1993 and the related statements of current and retained
earnings and cash flows and related schedules for each of the years in the
three-year period ended December 31, 1994, which report appears in the December
31, 1994 annual report on Form 10-K of General Electric Capital Services, Inc.
Our report refers to a change in 1993 in the method of accounting for
investments in certain securities.
/s/ KPMG PEAT MARWICK LLP
Stamford, Connecticut
March 31, 1995
<PAGE> 1
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being
directors and/or officers of General Electric Capital Services, Inc., a Delaware
corporation (the "Corporation"), hereby constitutes and appoints Gary C. Wendt,
James A. Parke, Joan C. Amble and Burton J. Kloster, Jr., and each of them, his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead in any and all
capacities, to sign one or more Annual Reports for the Corporation's fiscal year
ended December 31, 1994, on Form 10-K under the Securities Exchange Act of 1934,
as amended, or such other form as such attorney-in-fact may deem necessary or
desirable, any amendments thereto, and all additional amendments thereto in such
form as they or any one of them may approve, and to file the same with all
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done to the end that such Annual Report or
Annual Reports shall comply with the Securities Exchange Act of 1934, as
amended, and the applicable Rules and Regulations of the Securities and Exchange
Commission adopted or issued pursuant thereto, as fully and to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents, or any of them or their or his
substitute or resubstitute, may lawfully do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his hand this
29th day of March, 1995.
<TABLE>
<S> <C>
/s/ GARY C. WENDT /s/ JAMES A. PARKE
------------------------------------------ ------------------------------------------
Gary C. Wendt, James A. Parke,
Chairman of the Board, Senior Vice President, Finance
President and Chief Executive Officer (Principal Financial Officer)
(Principal Executive Officer)
</TABLE>
/s/ JOAN C. AMBLE
---------------------------------------------------
Joan C. Amble
Vice President and Controller
(Principal Accounting Officer)
<TABLE>
<S> <C>
/s/ KAJ AHLMANN /s/ HUGH J. MURPHY
------------------------------------------ ------------------------------------------
Kaj Ahlmann, Director Hugh J. Murphy, Director
/s/ NIGEL D. T. ANDREWS /s/ DENIS J. NAYDEN
------------------------------------------ ------------------------------------------
Nigel D. T. Andrews, Director Denis J. Nayden, Director
/s/ JAMES R. BUNT /s/ MICHAEL A. NEAL
------------------------------------------ ------------------------------------------
James R. Bunt, Director Michael A. Neal, Director
/s/ DENNIS D. DAMMERMAN /s/ JOHN M. SAMUELS
------------------------------------------ ------------------------------------------
Dennis D. Dammerman, Director John M. Samuels, Director
/s/ PAOLO FRESCO /s/ EDWARD D. STEWART
------------------------------------------ ------------------------------------------
Paolo Fresco, Director Edward D. Stewart, Director
/s/ DALE F. FREY /s/ JOHN F. WELCH, JR.
------------------------------------------ ------------------------------------------
Dale F. Frey, Director John F. Welch, Jr., Director
------------------------------------------
Benjamin W. Heineman, Jr., Director
</TABLE>
A MAJORITY OF THE BOARD OF DIRECTORS
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATMENTS FOR THE PERIOD ENDED DECEMBER 31, 1994, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000797463
<NAME> GENERAL ELECTRIC CAPITAL SERVICES, INC.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<CASH> 1,218
<SECURITIES> 30,872
<RECEIVABLES> 78,419
<ALLOWANCES> 2,062
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 18,763
<DEPRECIATION> 4,823
<TOTAL-ASSETS> 153,580
<CURRENT-LIABILITIES> 0
<BONDS> 34,312
<COMMON> 1
0
10
<OTHER-SE> 9,369
<TOTAL-LIABILITY-AND-EQUITY> 153,580
<SALES> 0
<TOTAL-REVENUES> 19,875
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 6,200
<LOSS-PROVISION> 873
<INTEREST-EXPENSE> 4,545
<INCOME-PRETAX> 2,949
<INCOME-TAX> 864
<INCOME-CONTINUING> 2,085
<DISCONTINUED> (1,189)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 896
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
